Q.3 Discuss the Importance of insurance in business?
Ans: IMPORTANCE OF INSURANCE
Importance of insurance can be judged by the following facts:
MORILISES THE SERVICES
Insurance mobilizes the small savings of the people and uses it for the long-term investment. In the modern business insurance companies are playing very effective role in collecting the savings of the people.
GIVES SENSE OF SECURITY
At every moment there is a chance of loss in business. Due to insurance risk is transferred to the insurance company and it gives the sense of security to businessman.
SOURCE OF CREDIT
An insurance company collects a lot of amount in the shape of premium from its customers. It also lends the money to the various institutions and the government.
SOLVES THE SOCIAL PROBLEMS
Insurance company also solves many social problems by providing financial assistance. In case of assured death it provides finance to his family. In case of any loss it compensates the loss.
SOURCE OF EMPLOYMENT
Insurance companies are providing employment to a large number of people, and reducing unemployment in the country.
PROMOTES INTERNATIONAL TRADE
Insurance companies are playing very effective role in promoting the growth of international trade. Today one exporter can send his goods to other country without a fear of damage or loss, because he shifts his risk to insurance company by paying the premium. If ship damages, insurance company will compensate the loss.
PROMOTES BUSINESS COMPETITION
Insurance also protects the small industrial units and also provides credit facility. So competition with the big firm’s increases that is very useful for the consumer.
In the present business world insurance companies are playing very important ride in promoting the industrial development. In the stock exchange insurance companies are the major investors in purchasing and selling the securities.
PROTECTION AND PROFIT
Insurance provides protection and profit to the assured person. For example, life insurance provides financial assistance to the family in case of death. On the other hand if assured person remains alive during the policy period then interest is also paid with the total amount deposited by the assured. So insurance is also an investment.
PROMOTES ECONOMIC GROWTH
Insurance contributes to the efficiency of the business and promotes economic growth and development.
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