The world that we are in is full risks and uncertainties. Families, individuals, businesses assets, properties and even property are exposed to different kinds and levels of risk. They are at risk of losing of health, life and assets, property as well as other assets. While it’s impossible to always stop unwanted events from happening the financial industry has created products to safeguard individuals and businesses from loss by compensating them using funds. Insurance is a financial instrument that helps reduce or eliminate the expense of loss or impact of losses caused by various kinds of risks.
Apart from securing individuals and businesses from all kinds of risk In addition, the insurance sector also contributes to the economic growth of the country by ensuring stability in the operations of companies and providing long-term financial resources to industrial projects. In addition, the Insurance sector encourages the benefits of saving among people and provides jobs to millions.
Let’s look at the details of the reasons why and how Insurance as a business is crucial to the growth of any economy.
Offers security and safety for businesses and individuals: Insurance is a financial aid that decreases the uncertainty that people and companies face at each stage of their lives. It is a great way to mitigate risk against events which could cause financial hardship to both individuals and businesses. ). For example, with medical costs rising at around 15 percent per year, even basic medical procedures can be costly enough to derail the budget of a family and having a Health Insurance would ensure financial protection for the entire family. For insurance for businesses, financial compensation is offered to compensate for financial losses from accidents, fire, theft, caused by marine activities, and other catastrophes, etc.
Creates long-term financial resources The Insurance industry generates funds through premiums collected from millions of policy holders. Because of the long-term nature of the funds they are used to build permanent infrastructure asset (such as ports, roads dams, power stations and so on.) that contribute to nation-building. The chances of employment increase with massive investments that result in capital creation within the economy.
Encourages Economic Growth: insurance industry makes a huge impact on the economy through the mobilization of domestic savings. Insurance transforms capital accumulated into productive investment. Insurance also helps to reduce loss, improves financial stability, as well as promoting trade and commerce activities that result in the sustainable growth of economics and growth. Therefore, insurance is a key element in the long-term sustainability in an economic system.
Offers support to families during medical emergencies: The health of families is crucial for everyone and the family health is the primary issue for the majority of. From grandparents to new children, hospitalization and medication are crucial to the family health. Costs for medical care that are rising and the escalating cost of medicines are enough to deplete your savings if you are not prepared. Anyone can be a victim of serious ailments (such as stroke, heart attack or cancer.) unexpectedly. In addition, the rising cost of medical treatment is a major worry. Health Insurance can be described as a plan that safeguards financial security against various health-related risks. With an Health Insurance policy through MIC Insurance, an insured is provided with financial assistance in the event of an emergency medical situation.
spreads risk: insurance helps in the transfer of risk from the person insured to the insurance company. The fundamental principle of insurance is spreading risk over a broad range of individuals. A vast majority of people are insured under policies and pays premiums to the insurance company. When a loss happens the insurer pays it from the corpus of money taken from the millions of policy holders.
