Advantages or Importance of Insurance

The insurance plays very important role in the economic development of the country and social life of the people. It provides financial protection against the loss of property and lives of the people. Its main advantages are as follows: Advantages or Importance of Insurance

1. Protection against Losses:

The main advantage of insurance is that it provides protection to the business community against losses, which may occur due to fire or due to any other accident. The business may purchase the fire insurance of marine insurance policy and can protect his property from these accidental losses.

2. Promotion of Saving:

When a person purchases lift insurance policy he has to pay insurance premium in lump sum or in installment. So insurance compels him to save some money for the payment of insurance premium from his limited resources. In this way insurance promotes the savings of the people and makes it possible to utilize these savings for productive purposes.

3.Low Prices:

The insurance has helped businessmen to sell goods at low prices. The

percentage for risk of loss is not added to the cost of products. The risk of loss is covered by the insurance policy.

4.Promotion of Business:

Owning to the fear of loss, common person hesitates to invest their money in business. Because insurance provides protection against losses, so encourages common people to start the business and avoid the risks of loss through the purchase of insurance policy.

5. Source of Credit:

In case of life insurance policy, the policyholder has a right to get loans from the insurant company up to a certain limit of his deposits at a very cheaper rate. Moreover, the financial institutions are also willing to accept the life insurance policy as security against loan. In this way the insurance also acts as source of credit for the policyholder.

6. Efficiency Increases:

The efficiency of business increases due to risk cover. The sense of competition induces people to shift their losses to insurance companies. There is increase in efficiency of businesses when there is no fear of loss.

7. Encourage International Trade:

In International trade, the man has a risk of loss due to destruction of goods

during transit. The marine insurance encourages international trade by providing

protection against risk of losses during transportation of goods.

Job Opportunities:

The insurance companies provide job opportunities to so many persons in various capacities, they hire people as permanent staff for the internal management of the company. They also appoint many persons as commission agents to promote

the sale of insurance polices. They also provide indirect job opportunities by investing their funds in other companies.

9. Research Facilities:

The insurance companies can conduct research about rate of accidents, death and other losses faced by businesses. The results of research are available for the benefit of common man.

10. Investment Opportunities:

The persons who have small saving but have no experience of business, they have a chance to purchase “with profit life insurance policies”. In this way, insurance provides financial protection as well as investment opportunities to its policyholders.

11. Spread of Risks:

Actually the insurance is a technique by which the risk of one person is grad of over the number of person and in this way protection is provided to the business community from loss suffered due to fire or marine accidents etc.

12. Education of Children:

Higher education is costly and it creates financial difficulties for the parents while educating their children. So, the children’s education policy minimizes the problems of the parents arise due to the education children.

13.Marriage of children:

In our country the costly dowry is serious problem for the parents. So the children’s marriage policy saves this problem and provides financial support to the

parents at the time of marriage of their children.

14. Compensation to Employees:

The insurance also provides financial assistance to Dfa Ho the dependents of employees in case of death or disability of the employees during their service. So the business community oftenly purchase group insurance policy to control and solve the problems crated due to the accident of their employees during job hours.