What are the Advantages of Insurance

What are the advantages of insurance?

Importance of insurance

The contributions of insurance to business community and human life are the significant.

Importance of insurance can be understand by the following facts.

Meaning of Insurance

• Reasonable profit

The businessmen can earn a reasonable profit for their businesses. The insurance can help them to earn the same rate of profit if their business fails to generate income.

• Sense of security

There are many chances of losses in a business. But due to insurance, the risk of losses is transferred to insurance company and it gives the sense of security to businessman.

• Employment increase

The insurance companies provided the jobs to thousands of people. In this way the problem of unemployment is reduced.

• Protection of property

Due to insurance the personal and business property is protected from natural losses such as accident, fire, etc.

• Solve the social problem

Insurance is useful device for solving the social problems. In cash of death provides finance to his family compensation is available to overcome the industrial injuries and road accident.

• Favourable balance of payment

The insurance of business is an invisible export and it provides sufficient contribution toward the balance of payment

• Equitable premium

The large policy holders provide large funds and small policy holders pay less money in common funds. In the way the amount of premium becomes equitable.

• Research facilities

The insurance companies can conduct research about the rate of accidents, death and losses faced by business units.

• Low price

The risk of loss is covered by the insurance policy. In the way insurance companies help the business to sell their products as low prices.

• Spread of risk

A large number of persons get marine, fire, life insurance policies and pay premiums to the insurance companies whenever a loss occurs, it is compensated out of the funds of the insurers. The loss is spread among a large number of policy holders.

• Promotes economic growth

Insurance contributes to the efficiency of the business and promotes economic growth and development.

• Gives sense of security

At every moment there is a chance of loss in business. Due to insurance risk is a transferred to the insurance company and gives the sense of security to businessman.

• Promotes business competition

Insurance also protects the small industrial units and also provides credit facility. So competition with the big firms increase which is very useful the customer.

• Promotes international trade

Insurance companies are playing very effective role in promoting the growth of international trade. Today one exporter can send his goods to other country without a fear of damage or loss. Because he shifts his risk to insurance company by paying the premium, If ship damage, insurance company will compensate the loss.

Insurance in Islam