Benefits of Insurance
There are various benefits for opting insurance. The benefits include:
- Protection: Insurance acts as a shield that protects an individual against sudden losses arising due to uncertain events. It reduces uncertainties in human life.
- Encourages Saving: Since an insurance policy works through the payment of regular premiums, it encourages saving habit among the policyholders.
- Spreading the risk: Insurance facilitates the spreading of risk among a large number of individuals, by collecting premiums from these people and paying claims out of these funds.
- Generates financial resources: The premiums collected are invested by the insurance company into high-interest yielding securities, leading to the generation of financial resources.
- Promotes economic growth: By assuring businesses that in unforeseen losses, the insurance company will bear them, insurance promotes investments by reducing the fear of loss.
- Eliminates dependency: Families depend on earning members, and businesses depend on assets for earning income. Thus, insurance seeks to eliminate dependency by transferring risk.
- Flexibility: Insurance is flexible because the insurer can choose any policy, with different terms and conditions, coverage, benefits, duration, etc.