Insurance is an evolving process that aims to safeguard the interest of an individual from uncertainty and loss. It is also described as a social device used in order to eliminate and reduce the risk of loss to property and life.
Insurance helps a lot on the general growth of the societies’ economy by giving stability on the function of its process. The insurance industries are developing financial institutions and then reduce uncertainties by helping improve each financial resources.
Once importance of insurance is it provide security and safety both in the business and in human life. There will always be fear of sudden loss; therefore, insurance gives a cover against it. It also generates funds by collecting premiums. These funds are being invested in the stock and securities of the government. These funds are employed in the development of the industry of a country in order to generate more funds as well as utilize an economic development.
On the other hand, insurance does not only give protections against uncertainties and risks but it also give a channel for investment. There are several types of insurance the enables a systematic savings by paying a regular premium. The insured person is getting a lump sum of an amount as what has been stated on the contract. Thus, insurance helps in the saving goals of an individual.
Insurance also brings a significant impact on the economy because it mobilizes and generates domestic savings. It turns those accumulated capitals into helpful investments. Aside from that, it also enables on mitigating financial stability, loss as well as promotes commerce and trade activities that later on results on the economic development and growth. For that reason, insurance is playing a vital role in the sustainable growth and development of the economy.
There are also situations wherein all of us can become a victim of unexpected critical illness. Therefor a rise in medical expense is one of its greatest concern. An insurance catering several health risk is very helpful. Insurance can also facilitate the spread of risk from the insured person to its insurer. A large number of individuals are getting insurance pay premiums and policies to its insurer. Therefore, when there is a loss occurred, the loss is being compensated out of the funds by the insurer.
There are also large funds that are being collected by the premium way. These funds are being utilized in the development of the industry of a country that helps in the acceleration of the economic growth. Because of these big investments, the employment opportunities are being increased. For that reason, an insurance serves as an important source in the formation of capital by a particular country.
Through insurance, companies are not the only one who benefits from it. The insured person as well as its family members and the economy also benefits from the great things that it offers to clients. Getting insured also means getting prepared on the possible things that might happen in the future.