Q.Explain the advantages of Insurance.

Insurance gives protection against risk, encourages saving, promotes trade and industry, provides security for credit, mobilises savings for national investment, creates employment and gives peace of mind.

Meaning

Insurance is a contract (policy) in which the insurer agrees to compensate the insured for a specified loss in return for a premium; it works on the principle of spreading the loss of a few over many.

Advantages of Insurance

1. Security against risk - Provides financial compensation for losses caused by death, fire, accident, theft, etc.
2. Encourages saving - Life-insurance policies combine protection with regular, disciplined saving.
3. Promotes trade and industry - By covering business risks it encourages people to invest and expand.
4. Credit security - Policies can be pledged to obtain loans from banks and financial institutions.
5. Mobilises savings - Insurers pool huge funds and invest them in industry and government securities, aiding economic development.
6. Generates employment - The insurance industry provides jobs to agents, employees and professionals. …