IMPORTANCE OF INSURANCE

The recent happenings in our society has intrigued me to write about this topic. As we all know that businesses, organizations has been exposed to debt especially the ones who don't have their businesses insured. Here I want us to discover the importance of insurance and why it plays a central role in your financial wellbeing, helping to provide financial security for you and your family when it is needed the most. There are so many things you can insure; you can insure your car, home, business etc. Insurance has evolved as a process of safeguarding the interesting of people from loss and uncertainty. It may be described as a social device to reduce or eliminate risk of loss to life and property. Insurance contributes a lot to the general economic growth of the society by providing stability to the functioning of process. The insurance industries develop financial institutions and reduce uncertainties by improving financial resources. I'll be listing the importance of insurance according to some research works: 1. PROVIDE SAFETY AND SECURITY: Insurance provide financial support and reduce uncertainties in business and human life, it provides safety and security against particular event. There is always a fear of sudden loss, insurance provides a cover against any sudden loss e.g., in a case of life insurance, financial assistance is provided to the family of the insured on his death. In case of other insurance security is provided against the loss due to fire, marine, accidents or a case like hoodlums attacking businesses as it is happening recently in our society. 2. GENERATE FINANCIAL RESOURCES: Insurance generates fund by collecting premium. These funds are invested in government securities and stock, these funds are gainfully employed in industrial development of a country for generating more funds and utilized for the economic development of the country. Employment opportunities are increased by big investments leading to capital formation. 3. SPREADING OF RISK: Insurance facilitates spreading of risk from the insured to the insurer. The basic principle of insurance is to spread risk among a large number of people. A large number of persons get insurance policies and pay premium to the insurer. 4. PROMOTES ECONOMIC GROWTH: Insurance generates significant impact on the economy by mobilizing domestic saving, insurance turn accumulated capital into productive investments. Insurance help to mitigate loss, financial stability and promote trade and commerce activities, these results into economic growth and development. Thus, insurance plays a crucial role in sustainable growth of an economy. 5. LIFE INSURANCE ENCOURAGES SAVINGS: Insurance does not only protect against risks and uncertainties but also provides an investment channel too. Life insurance enables systematic savings due to payment of regular premium. Life insurance provides a mode of investment; it develops a habit of saving money by paying premium. The insured the lump sum amount at the maturity of the contract, thus life insurance encourages savings. 6. MEDICAL SUPPORT: A medical insurance considered essential in managing risk in health, anyone can be a victim of critical illness unexpectedly and a rising of medical expense can be of great concern. Medical insurance is one of the insurance policies that cater for different type of health risks. The insured gets a medical support in case of medical insurance policy. By: Ibukunola Awosanya