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What is main purpose and need of Insurance?

The risk only means that there is a possibility of loss or damage. The damage may or may not happen. The main purpose of insurance is to provide security against the possibility that the damage may happen. 

Main Purpose of Insurance

There has to be an uncertainty about the risk. The earthquake may occur, but the building may not have been affected at all. The word 'possibility' implies uncertainty. Insurance is relevant only if there are uncertainties.

In case of a human being, death is certain, but it's time is uncertain. The person is insured, because of the uncertainty about the time of his death. In the case of a person who is ill, the time of death is not certain, though not exactly known. It would be 'soon'. He/she can't be insured.

Following are some advantages of Insurance:

  • Sharing of risk
  • Co-operative Device
  • valuation of risk
  • payment made on contingency
  • Amount of payment
  • Large Number of Insured person
  • Insurance is not gambling
  • Insurance is not charity
what is main purpose and need of insurance

Need of Insurance

Life is unpredictable and insurance is the simplest way to cope with the unforeseen and the unexpected. It is the best back-up that people or people dependents can rely on when risk becomes a reality and results in loss of life or property. So plan well and start early.

That's the best way to make insurance work for people. premiums will be low, processing will be minimal and a long term financial cover is in place to take care of later years .

Insurance is a contingency plan to take care of uncertainties. It is a way of providing for people dependents and ensuring continuity of their material needs and wants in your unfortunate absence.

  It can be said that insurance is a raincoat which protects us from rain

Insurance policy is a way to plan and ensure a regular income whenever people decide to retire. Also read about retirement insurance policy. Insurance is a responsibility. It ensures security and mitigates risk.

It is an assurance to someone dependents that he/she cares. Insurance is also an investment tool and provides tax benefits too. Most of all, insurance is peace of mind.

The price of getting insured is negligible compared to the value that insurance delivers. Insurance is sensible and practical.Because of this reasons insurance in needed.

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