Importance and advantages of insurance

Insurance   provides   benefits   to   an   individual, family, businessman as well as society. The main importance and advantages of insurance can be described as follows:

1)      Provides   economic   protection   : -   Insurance provides economic protection to the insured. It provides financial   protection   to the insured against the unexpected losses in consideration of nominal amount called premium. It provides financial protection to the dependent in case of pre-matured death of insured. Insurance company also covers the loss of properties due to theft, fire, accident and other natural calamities.

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Non-life insurance

   Non-life insurance refers to the insurance of goods and properties. It is a short-term contract between the insurer and the insured. It is taken for the indemnity of the loss of goods and properties on account of a specified cause. As a consideration of the insurance contract, the insured pays the amount of annual premium. The amount of annual premium is treated as business expense. Non-life insurance policy is generally taken for one year and it should be renewed every year. In fact, non-life insurance policy is taken as a means of providing financial protection for building, machinery,

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Types of insurance

Insurance can be classified into two categories as: 1) Life insurance 2) Non-life insurance

Life insurance:- Life insurance is one of the most common forms of insurance. It has secured a special position all over the world. It estimated that life insurance comprises 80 percent of the total insurance business done in the world. It was started in England and other European countries in the 16^th century. The life insurance in modern lines was developed in the 18^th century.

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Secondary Function

An insurance company performs the following secondary function:

1)      Provides capital: Insurance company collects small amount of money in the form of premium from various persons and organizations. Thus, insurance companies help for capital formation. The capital can be invested into different productive sectors which is helpful for the economic development of the country.

2)      Increases efficiency: Insurance eliminates the worries of losses and risks providing security against the losses. When people are free from the tension of unexpected losses, they can devote their  time for better achievement. As a result, efficiency of people increases in their works due to the insurance of life and properties.

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Introduction of Insurance

Human beings are exposed to a number of uncertain events, which are known as risks. It is impossible to eliminate these risks but a person can reduce the financial losses arising from such uncertain events with the help of insurance. In face, the greatest challenge for each and every business is the risk and uncertainty of financial losses. Such uncertainty may arise due to fire, theft,

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Insurance company

The insurance company involves in providing insurance service. It is the company, which involves to reduce the risk of financial losses due to unexpected events. It involves in compensating the financial losses to the individuals as well as corporations in consideration of the payment of premium. It is a highly popular financial institution. It has been established in both private and government sectors.

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