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.

Role of Insurance in Economic Development

For economic development, investments are necessary. Investment are made out of savings. A life insurance company is a major instrument for the mobilization of saving of people, particularly from the middle and lower income groups. These saving are channeled into investments for economic growth. The Insurance Act has strict provisions to ensure that insurance funds are invested in save avenues, life Government bonds, companies with record of profits and so on.This is most important Role of Insurance in Economic Development.

A life insurance company's funds are collected by way of premiums. Every premium represents a risk that is covered by that premium. In affect, therefore, these vast amounts represents pooling of risks. The funds are collected and held in trust for the benefit of the policy holders. The management of life insurance companies are required to keep this aspect in mind and make all its decisions in ways that benefit the community. This applies also to its investments. That is why successful insurance companies would not be found investing in speculative ventures. Their investments, as in the case of L.I.C., benefit the society at large.This is another Role of Insurance in Economic Development

Another Role of Insurance in Economic Development, A part of investment, business and trade benefit through insurance. Without insurance, trade and commerce will find it difficult to face the impact of major perils like fire, earthquake, floods, etc. Financiers, like banks, would collapse if the factory, financed by it, is reduced to ashes to ashes by a terrible fire. Insurers cover also the loss to financiers, if their debtors default.

Note:-If you have any kinds of suggestion please gives valuable comment in the of post. I like to consider them.Thanks for visit my blog. Bookmark my blog by just pressing Ctrl + D for next update.