Insurance is important because both human life and business. There are characterized by risk and uncertainty. Insurance plays key role in mitigation of risks. And you can see types of General Insurance. Moreover, you can check how many types of Insurance in India. Hence, for more details see what is life insurance and types of life insurance.
What is Insurance?
Thus Insurance is financial tool specially created to reduce financial impact of unforeseen events. And to create financial security. Indeed, everyone who wants to protect himself against financial hardship must consider insurance. Insurance is to protect financial well-being of you and your dependents in case of unexpected loss. In terms of an insurance policy creates contract between you and insurance company.
Insurance is an important aid to individual and industry. Every business enterprise involves large number of risks and uncertainties. It may involve risk to premises, plant and machinery, raw material and other things. Goods may be damaged or may be destroyed due to fire or flood. Some risk can be avoided by timely precautions and some are unavoidable. These unavoidable risks can be protected by insurance.
What are Aims of Insurance?
Every policy holder takes up an insurance policy because of following aims:
Family protection is main aim of life insurance. It provides protection to you and you’re especially in case of death.
Economic help in old age-The money earned in this scheme can be reinvested in old age or after retirement. The interest thus earned makes policy holder economically sound.
For education or marriage of children: Money invested in this scheme helps policy holder in his children higher education and marriage.
For property tax: money received after death of policy holder helps in paying property tax.
Relief in income tax. The policy holder gets rebate in income tax on payments of premium amounts.
Benefits of Insurance
Insurance is importance for every individual. Every day you face uncertainty and risk. Insurance offers individuals and organizations protection from potential losses as well as peace of mind. And in exchange it offers for periodic payments known as premiums. Today, insurance companies offer variety of insurance products. Such as property, casualty and life insurance. The benefits of insurance are discussed below:
Benefits to insured
Insurance provides security against risk and uncertainty. It enables insured to concentrate on his work without fear of loss due to risk and uncertainty. In case of life insurance it gives regular saving. Therefore insurance policy can be mortgaged and funds rose in case of financial requirements.
Especially in Insurance policies pension plans provide for income security during old age. And insured gets tax benefits for amount of premium paid. Hence, Insurance of goods may be mandatory requirement in certain contracts.
Importance of Insurance to Businessmen
Importance of insurance to a businessman can be understood from following points.
Security and Safety
It gives sense of security and safety to businessman. It enables him to receive compensation against actual loss. You can concentrate on his business with secure feeling. In case of losses arising from insurable risk your losses will be compensated.
Distribution of risk
Risk in insurance is spread over number of people rather being concentrated on single individual. Hence, check Government Initiative in Insurance sector
Normal expected profit
An insured trader can enjoy normal margin of profit all time. You will protect from unexpected losses because of insurance.
Easy to get loans
You will get bank loans easily if his stock or property is insured. And insurance provides security to lenders.
Advantages of Specialization
Businessmen can concentrate on their business activities without spending more time on safeguarding their property. On other hand, insurance companies can provide special insurance services.
Development of Social Sectors
Insurance funds are available for economic development particularly for the development of social sectors. Especially for a developing country like India, insurance funds are an important source for investing in infrastructure projects (roads, power, water supply, telecom etc).
Thus, insurance provides form of social cooperation. Hence, you can also read Why insurance is important
Finally, see types of travel insurance. Therefore check types of fire Insurance Policies. And also see top 10 Advantages or benefits of Reinsurance. Hence, check Role of Insurance Companies in Economic Development of India.