Advantages of insurance to individuals, society and economy 

The state of healthcare in developing countries has always brought a lot of tension to the less developed world, which continues to grapple with rising mortality rates and lower productivity. Recent stats by the National Academy of Sciences and Canadian Insurance market report have brought attention to developed nations. A robust public insurance policy coupled with a well-regulated insurance premium strategy have been the flag bearers of healthcare in these economies. 

 

An insurance cover allows individuals to transfer their future risks to an insurance company and therefore avoid the risks involved with an uncertain life and expensive property. 

Meaning and concept behind insurance

In simple words, insurance is a contract wherein the insured party receives financial protection against future damages from an insurance provider. 

The basic concept is that any quantifiable risk is also insurable. This concept triggered the advancement of various insurance types, eventually improving the ease of living.

Benefits of Insurance

Insurance has been in vogue for quite a long time. From health to income protection, insurance has been a straight jacket solution for every future uncertainty. 

Advantages to individuals:

The insured party is the first contact of any policy. Several benefits are enjoyed by the individuals. 

 

 

• Helps in maintaining a standard of living

 

By accounting for any unexpected damage, an insurance policy helps an individual to remain financially sound in times of crisis. 

 

• Helps cover future losses

 

Sudden losses can hijack and create an impediment in the current course of action. Insurance provides invaluable support in moments of crisis by acting as a raincoat during a sudden downpour.

Advantages to economy 

Economies also enjoy the perks of insurance policy which reflects in the annual trade documents. 

 

• Facilitates international trade

 

Countries with a robust insurance guarantee plan experience increased exports because of the trustworthiness factor.

 

• Promotes investment 

 

Healthy levels of saving can provide a boost to the investment sector. Once people learn to save for premiums, they are more likely to invest in different projects. 

Advantages to insurance companies

From a layman's view, the insurance industry seems to be unprofitable requiring constant investment. However, the sector has been a predominant force in acquiring huge profits for long periods. 

 

• Helps earn profit

 

Insurance companies use the inverted production cycle model to boost their profits. Unlike other businesses, Insurance companies are liable to pay only when an insured incident has occurred while earning premiums periodically. 

Advantages to society

Insurance premiums might be a headache for an individual but they often come as a huge relief to society.  

 

• Decreases social burden

 

Insurance agents account for uncompensated victims and help remove the uncertainty involved in daily life. 

 

• Promotes efficient utilization of resources

 

Certain insurance types encourage and incentivize the insured party to take up risk control activities. Such a tactic promotes the efficient utilization of available resources. 

Moments of crisis can be very stressful for individuals. While they deal with the loss of an expensive material item or a human being, Insurance policies take care of the financial repercussions of such a situation.