Needs and Insurance

Risks arise because there are needs to be fulfilled. The risks attached to early death arise because of the need to maintain the family that is left behind. If there were no needs, there would be no risks. Insurance is therefore, related to the needs of individuals. Different plans are designed with different benefits, so that they may cater to the different needs of people. While selling life insurance, therefore, it is necessary to be aware of the needs of people.

Needs of Insurance for people are not the same. They vary. They depend on personal values, demands of society, family and other relationships, age, occupation, habits, place of residence, and so on. Someone could be seriously concerned about the welfare of a movement for tress or for animals, at some neglect of own personal comforts. It is necessary to be sensitive to the needs.

Broadly, the needs of individuals may be classified as follows

1. Protection of the standard of living of the family, which is at risk on early death. Insurance must provide the necessary income to maintain the standard, after providing for repayment of loans and other debts Modern lifestyles subject people to debts on account of car, house appliances and equipments at home, obtained on hire purchase arrangements.
2. Future Expenses on account of children's education, marriage, start of some business and so on, which are ambitions and dreams. Wanting to send one's some to a medical college is a dream. It is not a need as essential as being able to provide for food and clothing.
3. Continuance of business, when financiers ask for life insurance policies as collateral security, or partners need to rearrange finances on the death of partner.
4. Substitute income when earning capacity ceases due to old age or disabilities.

All the above needs have to be met, after meeting the costs of inflation. People would not be consciously aware of these as formidable problems in the future. Even if they do, they mat not be willing to sacrifice some of the pleasure of the present in order to provide for the future. The future is seen to be some distance away and there is no hurry to provide for it. This is the difficulty, which life insurance agents face.

There have been two significant developments in the few years after the opening up of life insurance industry to private players. One is the result of demographic changes, caused by better health care and longer life expectancies. The number of aged people is more in absolute numbers as well as proportion to the total population. Therefore, there is an increasing need and demand for pension plans, whereby the elderly persons can get a steady income. The second development is the demand for linked insurance policies, arising out of the need to compensate for the falling value of money. Pension plans and linked products are becoming increasingly popular. The terms and conditions of these policies are different from the traditional life insurance products.