Safety and Security:
You feel safe and secure once the insurance reduces uncertainties in your business and human life. Insurance provides financial support, safety, and security against sudden unanticipated events. Once insured, you don’t have to live in a fear of contingent losses. The life insurance policy covers financial assistance provided to the family in case of the death of the insured. In the case of other types of insurance, security is provided against the loss due to accidents, fire, etc.
Encourages Savings:
Insurance policy not just protects against uncertainties and risks, but provides another opportunity to channelize your money. Life insurance is a systematic saving created due to payment of regular premium. It would not be wrong to say that an insurance policy is another investment channel and inculcates the habit of saving money. The insured gets the lump sum amount at the time of maturity of the contract.
Economic Growth:
Insurance helps one mobilize domestic savings. This leads to a significant impact on the economy. This collective amount or accumulated capital can be turned into productive investments, which lessens the gravity of financial loss, leads to financial stability, promotes trade and commerce activities that eventually help the economy to grow and develop.
Provides Medical Support:
With medical insurance, the worry of managing risks related to health is over. Anyone can suffer due to ill health or clinical illness. The larger section of the society finds it difficult to afford medical expenses. Medical insurance policy offers some cover for different types of health risks. The insured is assured to get medical support as per the medical insurance policy.
The Distribution and Spreading of Risk:
The cardinal principle of insurance is to spread risk among a large number of people. A large number of persons get insurance policies and pay a premium to the insurer, so on the happening of any loss, compensation is made out of funds of the insurer. The insurance facilitates the spread of risk from the insured to the insurer.