ADVANTAGES OF INSURANCE

1. Removal of uncertainties
Insurance company takes the risks of large but uncertain losses in exchange for small premium. So it gives a sense of security, which is real gift to the business man. If all uncertainty could be removed from business, income would be sure. Insurance removed many uncertainties and to that extent is profitable.
2. Stimulant of business enterprise
Insurance facilitates to maintain the large size commercial and industrial organizations. No large scale industrial undertaking could function in the modern world without the transfer of many of its risks to insurer. It safeguards capital and at the same time it avoids the necessity on the part of industrialists. They are therefore free to use their capital as may seem best.
3. Promotion of saving
Saving is a device of preparing for the bad consequences of the future. Insurance policy is often very suitable way of providing for the future. This type of policy is found particularly in life assurance. It promotes savings by making it compulsory which have a beneficial effect both for the individual and nation.
4. Correct distribution of cost
Insurance helps to maintain correct distribution of cost. Every business man tries to pass on to the consumer all types of costs including accidental and losses also. In the various fields of Insurance such losses are correctly estimated keeping in view a vast number of factor bearing on them. In the absence of insurance these losses and costs would be assessed and distributed only by guess work.
5. Source of credit
Modem business depends largely on credit; insurance has contributed 'a lot in this regard. A life insurance policy increases the credit worthiness of the assured person because it can provide funds for repayment if he dies. Credit extension is also obtained by means of various kinds of property insurance. A businessman who stock of goods has been properly insured can get credit easily. Similarly marine insurance is an essential requirement for every transaction of import and export.
6. Reduction of the chances of loss
Insurance companies spend large sums of money with a view to finding out the reasons of fire accidents, theft and robbery and suggest some measures to prevent them. They also support several medical programme in order to make the public safety minded. Without such losses preventive activities of insurance companies, the chances of loss would have been greater than they are at present days.
7. Solution of social problems
Insurance serves as a useful device for solving complex social problems e.g. compensation is available to victims of Industrial injuries and road accident while the financial difficulties arising from old age, disability or death are minimized. It thus enables many families and business units to continue intact even after a loss.
8. Productive utilization of fund
Insurer accumulates large resources from the various insurance funds. Such resources are generally invested in the country, either in the public or private sector. This facilitates considerably in over all development of the economy.
9. Insurance as an investment
A life policy is a combination of protection and investment which serves a useful purpose. The premium that the insured pays go on accumulating in a fund every year. The sum so accumulated by the insurance company earns interest. Under life assurance a person may also invest his capital in a annuity which will pay him an income every year till death. Therefore, insurance may be regarded as an investment.
10. Promotion of international trade
The growth of the international trade of the country has been greatly helped by shifting of risk to insurance company. A ship sailing in the sea faces some miss-fortune. A fire breaks out and burns to ashes all the merchandise of a business man. But insurance is one of the devices by which these risks may be reduced or eliminated. So industrialists and exporter may devote their full attention toward the promotion of business which may increase the export activities.
11. Removing fear
Insurance helps to remove various types of fear from the mind of the people. The insured is secured in the knowledge that the protection of the insurance fund is behind him if some sad event happens. It thus creates confidence and eliminates worries which is difficult to evaluate, but the benefit is very real.
12. Favourable allocation of factors of production
Insurance also helps in achieving favourable allocation of the factors of production. Capital is usually shy in the risky business. People hesitate to invest their capital where financial losses are great. If protection is provided against these risks by means of insurance, several investors will become ready to invest their funds in those fields.
13. Growth of Business competition
Insurance enables the small business units to compete upon more equal terms with the bigger organization. Without insurance it would have been impossible to undertake the risks themselves. On the other side bigger organization could absorb, their losses due to great financial strength. Moreover insurance removes uncertainty of financial losses arising out of the certain causes. It thus increases knowledge which is one of the most important preconditions of perfect competition.
14. Employment opportunity
Insurance provides employment opportunity to jobless persons which is helpful for the improvement and progress of social condition
15. Miscellaneous benefits
(i) It establishes the relation between the employed and employer by providing various facilities i.e. group life insurance, social security scheme, retirement income plan, workman's compensation insurance.
(ii) Insurance creates the confidence and sense of security among the policy holder.
(iii) Insurance company provides valuable services of skilled and expert persons to industries and business in order to eliminate various risks.
(iv) It promotes economic growth and development. This would be impossible in the absence of insurance.
(e) It contributes to the efficiency of business and also industrial and commercial executives.
(f) Security of dependents is made possible through life assurance. It gives relief to helpless families after the death of the earning member of the family.