Buying an insurance is totally difference from any other product or creating thing. Its not like buying a shirt or a cars or a grocery items. Buying an insurance is like, buying a promise. This promise is like, if something bad happens to our business, it will assist you to make your business back again to his own form. Having such a great opportunity by buying an insurance, sometimes, we get a question on our mind, “Why I need to buy Insurance or What is the importance of it?“
Today, in this article we are going to talk about Top 7 reason you should have to know about Insurance.
1. Provide safety and security:
Insurance provides financial protection and reduces risks in business and human life. It provides protection and defense against a specific case. There’s also a fear of sudden loss. Insurance offers security against any unexpected loss. For example, in the case of life insurance, financial aid shall be given to the insured’s family on his death. In the case of other insurers, insurers is given against damages due to fire, marine, injuries, etc.
2. Generates financial resources:
Insurance produces the funds by raising the premium. Such funds are invested in government securities and stocks. These funds are used for the industrial growth of a country to raise more funds and are used for the economic development of the country. Job prospects are enhanced by major investments leading to the development of capital.
3. Life insurance encourages savings:
Insurance not only protects against threats and uncertainty, but also offers an investment path. Life insurance provides for incremental benefits due to the lack of a fixed premium. Life insurance offers a means to save. It creates a habit of saving money by paying premiums. The insured shall collect the lump sum at the end of the contract. Life insurance thus promotes investment.
4. Promotes economic growth:
Insurance has a huge effect on the economy by mobilizing domestic savings. Insurance transforms surplus resources into profitable investment. Insurance allows risks, financial stability to be mitigated and facilitates trade and export activities, resulting in economic growth and development. Insurance therefore plays a key role in the sustainable development of the economy.
5. Medical support:
Health insurance is known to be important in health risk management. Anyone may unexpectedly be a victim of serious illness. And rising medical costs are of great concern. Health insurance is one of the insurance plans that provide for various forms of health risks. The insured shall seek medical assistance in the event of a medical insurance policy.
6. Spreading of risk:
Insurance enables the transfer of liability from the insured to the insurer. The fundamental concept of insurance is to distribute liability to a wide number of people. A significant number of people have insurance plans and pay premiums to the insurer. Whenever a loss happens, it is paid by the insurer.
7. Source of collecting funds:
Big funds are raised in the form of a premium. These funds are used in the industrial development of a country that accelerates economic growth. The prospects for jobs are improved by these significant investments. As a result, insurance has become an important source of capital accumulation.