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Importance of Insurance

The world that we are in is full uncertainty and risk. Families, individuals, businesses as well as assets and properties are subject to various types and levels of risk. They are at risk of losing of health, life properties, assets as well as other assets. Although it’s impossible to always stop unwanted events from happening but the financial market has come up with products to safeguard individuals and companies from such damages by compensating them with the financial resources. Insurance is a financial instrument which reduces or eliminates expense of loss or impact of losses caused by various types of risk.

In addition to protecting people and companies from a variety of risks The Insurance sector is a significant contributor to the overall economic development of the country by ensuring stability in the operations of companies and providing long-term financial resources to industrial projects. Alongside that, the insurance sector encourages the benefits of saving among people and creates jobs for millions.

Let’s look at the details of the reasons why and how Insurance as a field is essential for the development of any economy.

Insurance provides security and safety to both businesses and individuals. Insurance offers financial protection and decreases the uncertainty that people and businesses confront at every stage of their lives. It is a great protection against risks that could result in financial hardship to both individuals and businesses. ). For example, with medical costs increasing at a rate of around 15 percent annually, basic medical procedures can be costly enough to sabotage the budget of a family and an Health Insurance would ensure financial protection for the entire family. For business insurance, financial protection is paid to cover financial losses caused by incidents like fire, theft, accidents caused by maritime activities, catastrophes, etc.

Produces Financial Resources for Long-Term Use The insurance industry produces funds by generating premiums collected from millions of policy holders. Due to the nature of long-term they are able to invest they are used to build durable infrastructure assets (such ports, roads dams, power stations and so on.) that contribute to nation-building. The chances of employment increase with large investments, which result in capital creation that is essential to the development of the economy.

Encourages Economic Growth: Insurance industry has a major impact on the economy by generating savings in the domestic. The insurance industry transforms accumulated capital into productive investment. Insurance also helps to reduce loss, improves financial stability, and encourages commerce and trade actions that lead to the sustainable growth of economics and growth. Insurance is a key element in the long-term sustainability in an economic system.

Offers support to families during Emergencies in Medicine: The well-being of the family is essential for everyone and the well-being of family members is the primary issue for the majority of. From grandparents to new children, medical treatment and hospitalization can play a significant role in ensuring the family health. The rising costs of medical treatments and rising prices for medicines can drain your savings if you are not prepared. Anyone can be a victim of severe ailments (such as stroke, heart attack or cancer.) unexpectedly. The rising cost of medical care can be a source of worry. The Medical Insurance policy is plan that safeguards financial security against the various types of health hazards. With a MIC Insurance Health Insurance policy, an insured receives financial assistance in the event of an emergency medical situation.

Spreads risk by insurance: It allows shifting risk of loss from the person insured to the insurance company. The principle behind insurance is the spread of risk over a broad range of individuals. The majority of people purchase insurance policies and pay the premium to the insurance company. If a loss does occur the insurer pays it from the corpus of money taken from the millions of policy holders.