Insurance provides benefits to an individual, family, businessman as well as a society. This note has information about advantages of insurance.
Things to Remember
Insurance provides benefits to an individual, family, businessman as well as a society.
Insurance has become sure instrument to provide financial protection against an unexpected risk of losses.
An insured person should compulsorily pay the amount of premium in time as stated in the agreement in order to avoid fine and lapse of an insurance policy.
Insurance companies need different types of personnel having distinct skills, experiences and academic qualifications for operating its business.
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Advantages of Insurance
Insurance provides a number of benefits to the insured party which can be summarized as follow:
Provides economic protection The insured party is given the economic security by the insurer. In case of any unexpected loss or damage, the insurer has to pay to the insured party. The financial security is given on the basis of the insurance premium paid by the insured. It also covers the loss occurred due to the theft, natural calamities such as fire, flood, landslide, earthquake etc.
Minimize risks As the people are exposed to an uncountable number of risks and uncertainties, it becomes difficult for them to overcome such risks and uncertainties on their own. So, the insurance has become a medium to minimize the financial risk and uncertainties. Insurance has helped to distribute such risks.
Improves standard of living As insurance has become the medium to overcome the financial risks, it helps to eradicate the financial loss of the people that helps in maintaining the living standard of the people. The unexpected financial losses of the people are reduced to some extent.
Encourages saving The insurance premium is the compulsory payment done by the insured during the period of the insurance policy. So, it helps in developing the habit of saving among the people. The saved money can be utilized in some other works as well.
Eliminates dependency Insurance helps in eliminating the dependency level of the people as the insurance company provides the financial support to them. In case of the death of any earning family member of the family, the next family member (nominee) can get the insurance policy amount and can easily overcome the financial risk and make their life easy. It eliminates the dependency of the people and makes them self- dependent.
Grants loan The insurance company also gives the facility of granting the loan to its customers against the amount of premium they have paid, at the minimum rate of interest. Also, the insured can easily get the loan from any other financial institution against the insurance policy they have made as a collateral.
Creates employment opportunities As an insurance company needs a number of employees to facilitate the company, it creates employment opportunities for them. They need the employees from various educational background, experiences and skills. Hence, they increase the employment opportunities in the country.
Promotes foreign trade As the foreign trade is full of risk and uncertainties, the insurance company helps to reduce such risks. The insurance company and the insured party both are liable to the loss or damage of the property in case of the transit. Hence, people are interested towards the foreign trade as well.
