Now that we've explained the concept of insurance let's discuss the five reasons why insurance is essential to our society: Insurance has been a vital part of our society for centuries and can be dated back to the year 1343 when one of the oldest insurance contracts in recorded history was signed in Genoa, Italy. However, the essential gift of insurance to the community is the stipulation of risk sharing, risk transfer capabilities and loss prevention steps, which are a primary element of the insurance industry and are necessary for a well-functioning economy but remain mostly unseen. All Rights Reserved. Some of the benefits of insurance are obvious while others are not. Wealth of the society is protected: The loss of a particular wealth can be protected with insurance. The Sarrica Group, Inc. has written this article to help answer that question. (2000) introduction to insurance, she postulate that insurance is a process of transferring a risk from one party to another. 3. They reduce the destitution and misery. Insurance rescues many people in the society who are rendered destitute through misfortune. The insurance has been useful to the business society also. INTRODUCTION. Insurance is a part and parcel of society today. one side through various product and his service, company of insurance play a part in to accommodate various importance of client to get the benefit have save, investment, and protection to various unforeseen occurrence later. The provision for old age, sickness and disability of persons in general. These loans were fully paid, with interest once the ships had safely arrived. Medical Insurance is a policy that protects individuals financially against various types of health risks. Essentially the presence of insurance enables mitigation of losses, financial stability and promotes trade and commerce activities that result in sustainable economic growth and development. For example, the cost of fire insurance is reflected in house rent. In other words, the purpose of insurance is to help make the named insured financially whole again after a peril. When we are insured we have to pay premium. It covers for damaged home décor (if any), like carpets, clothes, wardrobes, plywood furniture, etc. Although individuals generally get insurance for self-serving reasons, the importance of insurance for society as a whole can’t be understated. Insurance companies provide the required funds for infrastructure development. Because it manages, diversifiesand absorbs the risks of individuals and companies, insurance is often a precondition for the development of other 1078 Oaks DriveFranklin Square, NY 11010(516) 277-0812info@thesarricagroup.com. Insurance is an important risk mitigation device. Importance of Insurance to Society Empower to Start Business Insurance empowers people to start their own business. The presence of an insurance policy protects the investors and mortgage lenders should damages occur in the building or if there are any lawsuits held against the business. Insurance enables to mitigate loss, financial stability and promotes trade and commerce activities those results into economic growth and development. Back on April 17, 2013, it was reported that a chemical explosion occurred from ammonium nitrate at the West Fertilizer Company storage and distribution facility in West, Texas. The problem arises when clients undermine the significance of insurance since insurance policies are an intangible product. Different government programs provide different benefits and are funded in different ways. CHAPTER ONE. 1.1 BACKGROUND OF THE STUDY . This also meant taking on a bigger mortgage on one income, as Karen is a homemaker. Similarly, at destruction of, property and goods, the family would suffer a lot. The most effective argument for reduction of fire losses is that smaller losses will make smaller premiums possible. Through various types of insurance schemes, the insurer protects the wealth of the society. In the case of the West, Texas, plant explosion, insurance could have helped a community to recover after a crisis. The following scenario is illustrative only to demonstrate the importance of insurance and is not based on an actual event. Insurance generates significant impact on the economy by mobilizing domestic savings. It brings reduced standards of living and the suffering may go to any extent of begging from the relatives, neighbors or friends. Importance to Society Finally, the benefits of insurance on the largest scale are those realized by society as a whole. Thus, insurance plays a crucial role in the sustainable growth of an economy. Insurance meets statutory and contractual requirements as well as … Life insurance offers protection against loss of human wealth. Tony (34) and Karen (33) recently upgraded to a new home to allow their twin boys Nicholas and Rocky (aged 4) more room to play. As health care costs continue to grow faster than the economy as a whole—not to mention faster than family incomes—individuals and families have felt the pinch of escalating health spending. Agricultural Pump sets Insurance in India | Features | Benefits, Weaknesses of Trade Union Movement in India and Suggestion to Strengthen, Audit Planning & Developing an Active Audit Plan – Considerations, Advantages, Good and evil effects of Inflation on Economy, Vouching of Cash Receipts | General Guidelines to Auditors, Audit of Clubs, Hotels & Cinemas in India | Guidelines to Auditors, Depreciation – Meaning, Characteristics, Causes, Objectives, Factors Affecting Depreciation Calculation, Inequality of Income – Causes, Evils or Consequences, Accountlearning | Contents for Management Studies |. Life insurance provides for loss of human wealth. A third and uncommon benefit of insurance is complying with legal requirements. Life insurance offers protection against loss of human wealth. The life insurance proceeds will be used by the company to help hire and train a new employee. Thanks for discussing the importance of having insurance. The insurance policies are important for providing safety not only for the person but also the society. Auto insurance is important because it is financial protection in case you get into a car accident and damage someone else’s vehicle or injure them. Sign up with your email address to receive news and updates. 1. 1.1 BACKGROUND OF THE STUDY Insurance can be seen from many points of view according to Hezen Ibeabuchi I. 4. In the absence of insurance, this would have been paid in a haphazard manner. Insurance plays a pivotal role in fulfilling certain needs for which state might have to provide. 2. It covers the medical expenses for the employee… It pays for the expenses incurred due to damaged electronic items, like television, cooler, computers, etc. The importance of this policy can be ascertained after listing down its benefits, as follows: 1. THE ECONOMIC AND IMPORTANCE OF MOTOR INSURANCE IN OUR SOCIETY. CHAPTER ONE. Insurance allows for a policyholder to transfer the risk of loss to insurance companies, so you can drive with a peace of mind knowing that you're covered should you ever get into an accident. This was a marine policy that revolved around the concept of bottomry, which allowed local merchants to finance their shipping expeditions through loans from various lenders. In whole life insurance industry, relation essential intertwine among companies of life insurance, agent and clients. Insurance benefits individuals, organizations and society in more ways than the average person realizes. However, the fertilizer company had only $1 million in general liability coverage. Additionally, the city also ended up filing lawsuits against the suppliers to West Fertilizer Company, claiming that they knew they were supplying inherently dangerous and toxic materials to the corporation. To get the money that your business needs to continue its operations, it's likely you'll need an active business insurance policy before getting a loan. All forms of insurance tend to reduce the extent of social evils that are meant to alleviate. Importance of Insurance to Society. I am planning to get insurance for our family. Those who have their insurance do not become a burden on state insurance plan. 4. In its simplest form, insurance is a promise that if you ever suffer from a loss or peril that you will be financially reimbursed by an insurance carrier. INTRODUCTION. Join us and maximize your potential here at Society Insurance by applying at societyinsurance.com. The amount of policy is paid to the insured or to his nominees. Government social insurance programs provide a safety net for society's elderly, indigent and unemployed persons. Even though in essence insurance is an intangible product it does provide a sense of financial security for both policyholders and potential investors. Unlike a car, jewelry or a house, you can't physically see or hold the value of an insurance policy. The human force, if it is strong, educated and care-free, will generate more income. So, insurance has become an important source of capital formation. The well-being of a family is essential to everyone, and the health of family members and loved ones is the biggest concern for most. Importance of insurance is a business are; The uncertainty of business losses is reduced. View all posts by Society Insurance Human Resources → Post navigation ← Previous Next → One thought on “ The Importance of a Daily Routine ” manish sharma @ayurvedatext.com July 6, 2020 at 1:33 pm. It covers the damages occurred to the building. Encourage Savings: Insurance does not only protect risks but it provides an investment channel too. In its simplest form, insurance is a promise that if you ever suffer from a loss or peril that you will be financially reimbursed by an insurance carrier. These types of insurance policies are designed to help protect accident victims against the costs of recovering from an accident that a driver or an employer has caused. What Is Insurance and Why Is It So Important To Society As A Whole? With a Health Insurance policy, an insured can also get financial support in case of a medical emergency. This is the reason the insurance has become legal and mandatory by low. THE ECONOMIC AND IMPORTANCE OF MOTOR INSURANCE IN OUR SOCIETY . The company did not have sufficient insurance coverage to not only help repair the property damages to the local community, but also the injuries and deaths that the explosion had caused. The Importance of Insurance chapter of this Money Management: Help and Review course is the simplest way to master the importance of insurance. 5. (2000) introduction to insurance, she postulate that insurance is a process of transferring a risk from one party to another. Insurance has since become an instrumental tool in promoting commerce and investment opportunities within our society. It provides a sense of security. © 2020 The Sarrica Group. Different types of Marine Perils in Marine Insurance, Rights of Insurer in a Fire Insurance Policy, Characteristic features of an insurance contract. 5. Insurance is clearly of great advantage and importance. In the absence of insurance, some tenants would pay higher rents than others. Insurance turn accumulated capital into productive investments. However, what happens when a family member dies or gets injured in an accident and is no longer able to bring in a steady income to the household? An example of this in today's society would be mortgage lenders that require proof of insurance prior to buying or constructing a new building. It offers various advantages to the society as given below: Importance or Advantages of Insurance to Society. Insurable Interest | Meaning | Who has Insurable Interest? What Is Insurance and Why Is It So Important To Society As A Whole? Obtaining sufficient insurance coverage is just the responsible thing to do. Insurance can be seen from many points of view according to Hezen Ibeabuchi I. In case of a business, i.e., if an office building or factory is destroyed, it covers the price of the shares broken. Moneylenders and insurance companies have been lending money to people and insuring against loss for centuries, but in the 20th century, governments around the world began to recognize the importance of financial institutions and passed legislation that made it easier for more people to obtain products and services from these entities. They are able to maintain the standard of living due to high returns. there was a different kind of concept that has been seen in the past regarding the insurance. CHAPTER ONE. Benefits of Insurance to society. Car insurance can also protect your vehicle from damage caused by an accident or a different covered peril, like falling objects, fire, or theft. Essentially, this was a way for merchants to cover their risk exposures for a premium. Hospitals are required to treat uninsured patients who come through the emergency room, writing off the cost as a loss. Importance or Advantages of Insurance to Society. These could lower the ideals and standards of conduct of entire communities. Protects society’s wealth. Because it provides security to the business owner in order to save their business setup cost. Read more Importance of Insurance to Business About us Commerce Mates is a free resource site that presents a collection of accounting, banking, business management, economics, finance, human resource, investment, marketing, and others. As discussed earlier in this article, insurance revolves around the Principle of Indemnity which states that on the occurrence of a loss the insured shall be put back into the same financial position as he/she used to occupy immediately before the loss. Insurance contributes towards society in many ways. However, if these goods were lost overseas, they didn't have to pay a for the peril. In case of fire, explosions and other calamities that would tend to impoverish (render poor) families would have been relieved of the financial loss if adequate insurance had been maintained. The Sarrica Group, Inc. has written this article to help answer that question. The Sarrica Group, 1078 Oaks Drive, Franklin Square, NY, 11010, United States. Life insurance provides a mode of investment. Secondly, insurance promotes investment. The explosion caused by West Fertilizer Company did $100 million in damages to the community, including schools and hospitals. Insurance provides security to the insured during his life and to his dependents. 3. Provides Support to Families during Medical Emergencies: Well-being of family is important for all and health of family members is the biggest concern for most. IMPORTANCE OF INSURANCE The process of insurance has been evolved to safeguard the interests of people from uncertainty by providing certainty of payment at a given contingency. 4. Through various types of insurance schemes, the insurer protects the wealth of the society. The obvious and most important benefit of insurance is the payment of losses. The insurance develops a habit of saving money by paying premium. Join us and maximize your potential here at Society Insurance by applying at societyinsurance.com. View all posts by Society Insurance Human Resources → Post navigation ← Previous Next → One thought on “ Importance of Ergonomics ” YULI April 29, 2019 at 8:32 am. An example of this would be Auto Insurance or Workers' Compensation Insurance. Insurance eliminates dependency: At the death of the husband or father, the destruction of family needs no elaboration. The reality is anyone can unexpectedly fall victim to critical illnesses (such as heart attack, stroke, cancer, etc.) Firstly, insurance, like banking, promotes savings. 2. Most people will agree that there is nothing more important than family. Insurance distributes the cost of accidental events in a equitable manner. Insurance revolves around the Principle of Indemnity which is to compensate or secure the … The true value of insurance lays in the financial security and peace of mind that you obtain knowing that your property and well-being is protected after a catastrophic event. Business efficiency is … THE ECONOMIC AND IMPORTANCE OF MOTOR INSURANCE IN OUR SOCIETY. I will take note of all of these and look up some agents to help me out. It provides employment opportunities. General insurance policies protect the property against losses due to fire, theft, accident, earthquake, etc. Social Security and Medicare benefits focus on retired and disabled individuals. Insurance revolves around the Principle of Indemnity which is to compensate or secure the policyholder in the same financial position prior to the event of a loss. Many sole proprietors can also utilize the benefits of life insurance. (2000) introduction to insurance, she postulate that insurance is a process of transferring a risk from one party to another. As such, both general and life insurances offer protection to stabilize business condition and financial position. The insurance company can easily invest its funds in industry, agriculture and commerce. Insurance is required by law and is mandatory for both individuals and businesses. INTRODUCTION. Insurance can be seen from many points of view according to Hezen Ibeabuchi I. Potential investors may also require evidence that your company is sufficiently insured before investing in your business. However, medical treatment and medicine prices are continually rising. The insurance principle comes to be more and more used and useful in modern affairs. 1.1 BACKGROUND OF THE STUDY. Here, the policy may be utilized as a business continuation plan. 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