Do something today that your future self will thank you for
The world we live in is full of uncertainties and risks. People, business and assets are exposed to different types of risks. These include risk of life, health, assets, property, etc. Although it is not always possible to stop uncalled-for circumstances from happening, insurance world has formulated notions that assist individuals and business houses against such mishaps by making up for them with financial resources. Insurance is a financial product that helps to mitigate or eliminate the effect of loss caused by different types of risks.
Understanding the value of insurance in today’s time is absolutely necessary.
- Gives Security to Individuals and Businesses: Insurance provides financial help and mitigates uncertainties that individuals and businesses face at every step of their existence. It provides an ideal risk mitigation mechanism against events that can cause financial stress to individuals and businessess. For instance, growing medical costs can wipe out a family’s budget in case of health emergencies, but a Health Insurance would ensure financial security for the family. In case of business insurance, financial compensation is provided against financial loss due to fire, theft, mishaps related to marine activities, etc.
- Generates Long-term Financial Resources: Funds are generated by the insurance sector by the premiums paid by the policyholders. These funds are then used to create long term infrastructure investments (such as roads, ports, power plants, dams, etc.) that are a part of nation building process.
- Promotes Economic Growth: Mobilization of savings by the insurance sector strengthens the economy. Insurance turns accumulated capital into productive investments. Insurance helps in spreading of losses, among many policyholders and providing financial stability and mitigation of the risks thereby promoting and safeguarding trade and commerce activities that results into sustainable economic growth and development. Thus, insurance plays a crucial role in the sustainable economic growth.
- In Medical Emergencies, Insurance Provides Support to Families: Well-being of family members is a priority for everyone and health of family members is the biggest concern for most. From elderly parents to newborn children, medication and hospitalization play important role while ensuring well-being of families. Rising medical treatment costs are enough to drain your savings if not well prepared. Anyone can fall victim to critical illnesses unexpectedly. And rising medical expense is of great concern. Medical Insurance is a policy that which covers policy holders and their dependents financially against a variety of health risks.
- Spreads Risk: Insurance shifts the burden of risk from the Insured to the Insurer. The basic principle of insurance is to spread risk among a lot of people. A large number of people get insurance policies and pay premium to the insurer as the premiums as usually kept at an affordable rate. Whenever a loss occurs, it is remunerated out of collection of funds from the large number of policyholders.
Concluding that, apart from protecting people and businesses from various potential risks, the Insurance sector contributes significantly to the general economic growth of a country by providing stability to the running of businesses and generating long-term financial resources for business projects. Insurance sector also gives a boost to the virtue of savings among individuals and generates employments for many, especially in a country like India, where savings and employment are of immense importance.