Man’s life is surrounded by different types of calamities like accident, untimely death, and loss of property by fire, loss by theft or flood, etc. For reducing the uncertainty, insurance is the only way, which also plays very important role in present day or situation when uncertainties are prevailing everywhere. It provides protection against risk. It protects human beings from birth till death. It is not limited to any individual, but it spreads to the different section of the society, business and all over the world. Importance of insurance can also I become clear from the following points.
- Importance to an individual.
- Importance for business.
- Importance for society or nation.
1) Importance to an individual
Insurance is important to an individual by the following ways: (a) financial protection, (b) saving and (c) safety of property.
a) Financial protection: It provides financial protection. If a person insures his life or his property after completion of period or certain death or any type of loss in property, insurance company will compensate the loss.
b) Saving: It is a very good means of saving because in insurance, an amount of money in the form of premium is regularly paid by the insured to the insurer. This will develop saving habits of people.
c) Safety of property: It provides safety against risk to the insured property. If a person insures his property then any damage arises against property, insurance companies will compensate the loss of it.
2) Importance for business: Insurance facility provides various benefits to businessmen or Business empire by the following ways: (a) Protection against loss, (b) Increase in efficiency, and (c) Stability.
a) Protection against loss: Business is a very risky game. It is surrounded with various types of risks. It provides protection against risk of loss in business. If business is insured, then any type of loss is compensated by insurance company.
b) Increase in efficiency: When a person insures his business, he feels safety and can work freely without any tension, which will enhance the efficiency of a businessman towards the business activity.
c) Stability: It provides stability, too, because with insurance, any loss, which may occur from an unfortunate event, is compensated by the insurance company, and business organization become unaffected.
3) Importance for society or nation:
Insurance is also helpful for the society or nation by the following ways; (a) Capital formation, (b) Employment opportunity, and (c) Economic Development.
a) Capital formation: It is the main source of capital formation. Premium of insurance company creates huge funds, which help the government to invest in different sectors of the society and also provide financial support for development.
b) Employment opportunity: It also provides employment opportunity. For insurance companies various types of staff are required. So establishment of insurance company become helpful to reduce the unemployment.
c) Economic Development: It is helpful in developing economy of the country. Insurance company provides finance to the Government as investment. So investment in insurance company becomes helpful in the development and prosperity of the nation.
For citing this article, use:
- Nasar, S. (2013). Performance evaluation of marketing practices of life insurance corporation of India_A study with reference to Ramnad District.
