Insurance is one type of risk management and it is used to face the risk of contingent and uncertain losses. One can transfer the risk or loss from one entity to another entity by paying some amount of money. Who sells the insurance policy is called as insurer and who purchase the insurance policy is called as insured.
Importance:
If one pays regular premium for insurance company, then company will insure the life, body or property insurance of insured. So, it has a great advantage and importance in individual’s life. Insurance provides protection and also it is useful for saving purpose. Insurance is like banking, savings are promoted by it. And investments are also promoted by this insurance if a policy holder pays some amount of money at regular intervals as a premium. Those funds can be invested by insurance company in different industries, agriculture and commerce. This will help national economy to grow and also help insurance company and insured. Policyholder can have peace of mind because of this insurance policy. Because an insured is secure in the form of insurance coverage protection in any unfavorable event. In this way, insured gets confidence and removes worries about future problems.
Benefits:
- Group life insurance, social security scheme, retirement income plan, workman’s compensation insurance can be provided by insurance company to insured.
- Security and confidence can be provided by insurance policy.
- Efficiency of business, industrial and commercial executives are contributed by insurance.
- Economic growth and development can be promoted by insurance policy.
- Provides financial security to policy holder’s family members in case of his death.
So, insurance is important to every individual and there are many benefits to policyholder and country economy as well.