Insurance plays an important role in human life because it helps to recover from financial losses. When we talk about insurance it is very common people tends to ignore insurance policy by making silly excuses like we are safe, we don’t require an insurance policy. Insurance policy also involved in safeguarding people’s life form uncertainty. Insurance can also describe as a social device which decreases the loss or damage to the property and life.
Insurance policy also plays a great role in economic growth of society and country by providing stability to the functioning of the process. The financial institution developed by the insurance industry and reduced the ambiguity by developing financial resources. Financial resources are now within reach of common people because of the insurance industry. Below are few points to explain why insurance is important.
1. Insurance Grants Safety and Security
Insurance contributes to financial support and decreases the ambiguity in human’s life and businesses. Insurance provides protection against any particular event. In human life, there is always a chance of sudden loss. Insurance gives protection form these type of sudden losses and secure human life.
For example, suppose life or term insurance provides financial support to the insured person’s family member in case of death of insured person. Insurance also provides protection against loss due to fire and any man-made disasters like accident, burglary etc. Insurance is important for the firm, shops and home to secure the property. Different types of insurance policy provide particular benefit.
2. Develop Financial Resources
Insurance industry generates funds by collecting insurance premium. The funds collected by insurance industry than invested in government’s security and stocks. These funds contribute to the country’s growth and make financially strong. The economy of the country is being boosted by the funds invested by the insurance industry. Big investments lead to the capital formation which results in an increase in the employment opportunity. Insurance also contributes to the industrial development of employed. It is also boosting individual’s finance life.
3. Life Insurance Boosts Savings
Insurance policies not only giving protection against risks and misshaping, but also gives an opportunity to investment and savings for individuals. Life Insurance set up systematic savings schemes due to payment of premium on a regular basis. Insurance is basically an investment which enables you to save money by paying premium towards insurance policy. The insured person get a maturity amount at the end of policy tenure as per contract with insurance company. So in this way life insurance inspires savings. Life insurance also enables you to start investing with small amount of money.
4. Encourage Economy Growth
Insurance industry gives powerful impact to the economy by organizing domestic savings. Insurance turns unusual capital into effective investment schemes. Insurance provides protection against risk, losses and give financial stability and encourage trade and business exercise which all results in growth of economy and development of country. So this way insurance plays a crucial role to the growth of economy.
5. Medical Support
Health insurance is important for recovering from damage done due to critical illness and health issues. Health insurance is beneficial because of increasing the medical cost and medical equipment cost which results in costly treatment to critical illness. Medical insurance pay your medical expenses and help you recover from financial loss due to health problem. If you have any kind of health issue you should buy a good health insurance policy. Medical cost is increasing day by day, if you don’t have a health insurance policy you might be in problem in future.
6. Spreading of Risk
The basic principle of insurance is to spread the risk from one person to large number of people. Thus insurance function to transfer the risk from insured to insurer. Many of the people buy insurance policy and pay premium on a regular basis. Any time loss or damage occurred the compensated by funds of insurance company.
You may Like to Read: Top Travel Insurance Myths or Illusion Busted
7. Source of Collection Funds
According to data a large number of funds are collected by the way of the insurance premium. The funds collected by the insurance company in the form of insurance premium are invested in the industrial development of the country, which encourages the economic growth. Employment opportunities are boosted by such big investment funds. So insurance is the main source of capital formation.