Insurance plays a vital role in the overall growth of the economy. With the creation of an insurance market, insured people and companies providing insurance meet to facilitate the activity.
Insurance has a positive impact on the GDP growth of a country, as well. Many banks, like columbia bank medford, also provide insurance cover to individuals.
The insurance sector is an important financial sector as it impacts the overall financial stability of an individual. It is a mechanism by which an insurer covers the risk against an unfortunate event by diversifying it among individuals of similar cover.
Losses covered under insurance are mainly caused by damage due to fire or any other indirect loss. Insurance thus plays a crucial role in safeguarding people from risks and dangers.
Role of Insurance
Provides security and safety
One of the insurance companies’ major roles is providing financial support during unfortunate events in social and economic life. It provides a cover against any sudden loss.
Financial resources increased
Insurance also paves the way for the increase in financial resources at the hands of the government. These companies pool premiums from individuals to support them when a loss is suffered, mobilize savings into one fund and invest further in economic development.
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It encourages people’s savings. It is very necessary to have a source of financial security during old age, which is inculcated by insurance companies. Also, it develops a habit of saving among individuals by paying a premium. The insured gets a lump sum amount on maturity.
Insurance by pooling funds from different people’s spreads among different individuals insured under the same cover. In addition to eliminating individual risk, insurance also reduces the aggregate risk in exchange for certain costs for unforeseen events.
So, the role insurance has always been on crucial point. For enhancing this future security option, take account of the above-mentioned factors.