Importance of insurance for public
Insurance is a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium. Uncertainty and losses are inevitable. In the process of safeguarding and protecting from these losses insurance has evolved. It is a form of social device for reducing and compensating risks and loss of property, lives, and catastrophes.
There is insurance for newly born, education, medical, life, cars, buildings, in fact, everything has been insured and this is the testament to the importance of insurance. Insurance not only function as a socially, financially compensating device it provides safety and security to the society. It provides financial support in events where something has been lost or damaged. It is an important proactive mean of preparing for a future peril.
It provides security in business and human life. Business is all about uncertain profits and losses. Insurance is a must where losses are inevitable. Therefore, insurance policies play a greater role in saving the companies from severe bankruptcy. It enables the businessman to compensate against loss to ensure business longevity. It enables him to concentrate on his business with a sense of security and safety in case of losses. Financial security is provided on loss due to fire, accidents as well.
There is always the fear of sudden losses and people are prone to unexpected illness and diseases. The insurance policy provides a cover against any of loss. For instance, if a person has been paying a premium for his life insurance, life insurance financially supports the family of the insured on his death for burial, funeral and other expenses.
The medical insurance is responsible for assisting risk in health in times of personal injury or any other health diseases. This policy caters to the different type of health issue and covers the cost of medical cost. Medical expenses are rising and are becoming a great issue and concern especially in emergencies where instant financial support is needed. Therefore, if a person insures a premium before any ill events he/she can avail financial support in times of emergencies. Insurance perhaps acts as the backup to any people or businessman in times of financial crisis.
Insurance is considered to have become a source of capital formation. A considerable amount of fund is collected when people who avail insurance pay premium. These funds can be utilized and invested productively. The accumulated sum can be invested in the industrial development of countries, promoting trade and commerce which otherwise would have been difficult to develop if there was a shortage of the country’s economy. Through these activities, there is the rise in employment opportunities improving the overall growth of the public, the society and the economy of the country.
Insurance not only compensates and reduce uncertain losses it helps men stay safe and secure, improve the economic state of a country. Insurance is the shortest route to living and doing anything longevity. It is a proactive means of financial loss. It helps societies and individuals prepare for catastrophes and mitigate the effects of these uncertainties on both household and societies Indeed, insurance is a financial backup.