Insurance : Need and Importance

• Preface
• Emergence of insurance
• Scope and Types of Insurance
• Meaning and types of risks
• Need for Insurance
• Importance of Insurance
• Insurance limits

Human beings are full of apprehensions and risks of loss of life. Man is mortal both body and property, but when he attains mortality is completely uncertain.

Therefore, insurance has become an important requirement to meet your obligations. In fact, business is a game of risk, but insurance is only for pure risks. Not hypothetical risks. Insurance is the main hand behind the current progress. The scope of insurance has now expanded from fire insurance to marine insurance. Today such insurances are also done by insurers which could not have been imagined till some time ago. It would not be an exaggeration to say that insurance is serving and helping the person in all respects except to bring the dead person alive. Entrepreneur is free from the worry of risks and is involved in commercial and industrial work, this has been possible only due to insurance.

There is no authentic mention or history of the origin of insurance, but from various descriptions it can be concluded that insurance originated with the development of civilization in very ancient times. Earlier, the joint family system was also a form of insurance, if someone in the family dies, becomes disabled, becomes unemployed, other members of the family take care of that person, his wife and children, but at present this system is dismantled.

The need arose. It is said that insurance was introduced for the first time in Mesopotamia and Babylon 3000 years ago.

The development of modern insurance is believed to have taken place in the 13th century. In ancient times, the movement of goods with foreign countries was mostly by sea route, which was full of many risks. To avoid these risks, traders used to make an agreement that the traders would share the losses on the way according to their interests, similarly there was a practice of giving loans which is called Bottomry Bond.

Thus first marine insurance and then fire insurance was developed. A coffee seller named Ed modernized marine insurance in London. In the Great Fire of London in 1666 in which 13000 houses were burnt down, insurance was promoted and in 1680 Shri Ganesh became the first fire insurance company named ‘Fire Office’. The origin of life insurance is also considered to be BC. The Romans were familiar with life, but the modern form began only in 1583, while the life of Mr. William Gibbons of London was insured for one year.

Origin and development of insurance in India –

The present form of marine and fire insurance in India has come from England. In 1850, Triton Insurance Company Ltd. was established in Calcutta for general insurance business. was established. In 1907 the Indian Mercantile Insurance Company Ltd. Established in Mumbai, which first started doing fire insurance. Then many Indian and foreign institutions started working in this field. In order to regulate and control the functioning of these institutions, “Insurance Act 1938” was made in India. Similarly, in the year 1956 “India Reinsurance Corporation Ltd.” was established. Which started reinsurance of the country’s big insurance companies to a large extent.

India’s general insurance business was nationalized in 1971. Acquired 107 companies carrying out marine, fire and miscellaneous insurance and handed over to General Insurance Corporation of India and its four subsidiaries.

The process of liberalization in the insurance sector in India was started with the formation of Malhotra Committee in 1993, but the process of privatization was started duly by passing a bill in the Lok Sabha on 1 December 1999 when the ‘Insurance Regulation and Development Authority’. Act 1199″ was made, From March 2003, the four subsidiaries of the General Insurance Corporation were also separated from it. Now it is doing insurance business as independent companies. The Insurance Regulatory and Development Authority (IRDA) has authorized the General Insurance Corporation of India as the reinsurer of India.

Life insurance in India started with the establishment of Oriental Life Insurance Company in Calcutta in 1818, other companies were also established in 1823, 1829, 1847. In 1871, an Indian organization named “Bombay Mutual Life Assurance Society” was established, which started insuring Indians at normal premium rates. Later also in 1912, 1928 other Acts were also made. But in 1938 by integrating all the Acts for insurance regulation. An Insurance Act was enacted.

Life insurance business was also nationalized in 1956 and Life Insurance Corporation of India (LIC) was established to conduct business and the business of 245 domestic and foreign insurers was acquired and handed over to Life Insurance Corporation.

Liberalization was also adopted in the field of life insurance in 1999. Now many private companies are working in the field of general insurance life insurance.

There are many types of insurance, but the main classification is as follows:-

1. Life insurance – In life insurance, the insurer will pay a fixed amount to the insured after a certain period in return for a fixed return (premium) or to his heirs on the death of the insured. promises to give. The amount of premium can be deposited for a fixed period of time, at certain intervals or in a lump sum. If the death of the insured dies within the insurance period itself, then the insurance premium does not have to be paid further and the claim amount is given to the heirs.
2. Fire Insurance – In fire insurance, the insurer gives an undertaking to the insured to cover the damage caused by fire to the insured subject matter within a fixed period of time in exchange for a fixed premium, this is usually done for a period of one year only.
3. Marine Insurance – In marine insurance, in return for a fixed return, the insurer undertakes to protect the insured against certain perils and losses from marine perils. Marine insurance is done for the ship, the cargo loaded in the ship, the ship’s brother and the sea risks in the way such as the ship colliding with another ship or rock, storm etc.
4. Social Insurance – Social insurance is that system in which many risks like unemployment, disease, accident, death etc. can be insured with the help of workers, employers and government so that even if these risks arise, they can live a sure life. . The following types of insurance are usually included in social insurance.
   1. Slow illness – Arrangements are made for medical facilities, medicines and compensation for the duration of illness on falling ill, for example Mediclaim scheme.
   2. Disability Insurance – There is a provision of compensation for the complete or partial disability of the employee in the accident in the factory. The employer hands over this liability to the insurer by getting the insurance done.
   3. Unemployment Insurance – Insurance company gives assistance to get employment again if unemployed due to specific reasons, period
   4. Old Age Insurance – Financial assistance is given to the insured after a certain age.
5. Miscellaneous insurance – In addition to marine, fire, there are also some other risks that a person tries to insure, and it is also mandatory to have some insurances Some examples of miscellaneous insurance are as follows
   1. Vehicle Insurance – Vehicles Getting insurance is mandatory. In this, the damage caused to the vehicle and third party is insured.
   2. Personal Accident Insurance – In this insurance, the insured is compensated for the damage caused by an accident.
   3. Theft, dacoity insurance – In this insurance, the insured is promised to compensate for the loss caused by theft, burglary, burglary, dacoity etc.
   4. Statutory Liability Insurance – Many statutory liabilities of a person can arise, they can be insured, such as injury to self or property to a third person, damage to neighbors due to fire, accident during employment To suffer etc.
   5. Reliability Guarantee Insurance – In this insurance, the insurer guarantees the integrity of the employees of an organization and gives a promise to compensate for the loss caused by the beneficiary.
   6. Crop Insurance – In crop insurance, the insurer generally undertakes to compensate for the damages caused by climate related such as drought, flood, storm, storm etc., outbreaks of epidemics, plant diseases, riots and strikes.
   7. Livestock Insurance – In this type of insurance, if the animals are damaged due to epidemic or due to other insured reasons, then compensation is given. Insurance of cow, bull, buffalo, goat, camel is particularly prevalent in India.
   8. Crime Insurance – This insurance is done to provide protection from the increasing crime trend.
   9. Engineering Insurance – The machines and equipment installed in the factory are insured.
   10. Other insurance – In addition to the above mentioned insurance, many insurances are also done like beauty, air travel, showroom glass, television, pumpset, bullock cart, cycle etc.

1. Risk – Meaning and Definition – There is no common definition of the word risk, the word has been used with different meanings in different circumstances. Frank H. According to Knight – “Risk is calculable uncertainty.” According to the Babster dictionary – risk is the possibility of loss, injury, damage or destruction. “Thus we can say that the possibility or uncertainty of any misfortune, damage, destruction, loss or accident is called risk.

1. Types of Risks – Risks can be divided into several classes.
   1. Property, Liability and service-class risks –
      1. Property risks – arise from the destruction of the property of a family or business, for example the possibility of destruction of a shop or house.
      2. Liability risks – risks arising from the destruction of property of another person or organization Cause losses to the employees.
      3. Sedimentary risks – Risks that arise due to an organization or a member of the family, e.g. death of the head of the family,
   2. Serious and catastrophic risks and significant risks –
      1. Critical Risks – Risks which may result in total loss of owner, Tsunami, severe fire etc.
      2. Significant Risks – These risks can seriously disturb the family and business financial situation that it may take a long time to recover from them. It seems that due to the economic downturn Rav.
   3. Static and Dynamic Risks –
      1. Static risks – which arise due to the actions of uncontrolled forces of nature or due to human errors. These risks can be managed better.
      2. Dynamic Risks – Risks arise due to changes. It arises from threats that have national consequences such as inflationary technology, etc.
   4. Basic and Specific Risks –
      1. Basic Risks – Risks that have an impact on the wider population. These risks arise due to changes in the whole economy, social system or environment. Example- boom, recession, train accident, storm, earthquake etc. Basic risks also affect the experience of the insurance company.
      2. Specific Risks – These risks arise only because of the individual and the person controls these risks in his own way like theft, house fire etc.
   5. Insurable and Insurable Risks –
      1. Insurable Risks – Risks which can be insured through proper underwriting process. Some risks are insured at simple premium rates, such as certified and well-certified risks. Most of the risks are generally certified, but the premiums for the best-tested risks are very low. Some risks are bad too. Those having above average risk which can be insured at higher premium rates, these risks can be fixed, in ascending order or also in decreasing order. For example person being disabled, person having high blood pressure or heart disease etc.
      2. Insurable Risks – The insurer does not insure certain risks at all. No matter how high the premium rate the insured is willing to pay. These are ineligible risks to be insured. For example, in life insurance, patient insurance of cancer will be considered a disqualifying risk. If they are insured, then such a contract would be gambling and not insurance and would be against the interests of the existing insureds.
   6. Net and Presumptive Risks –
      1. Net Risks – Net risks are those which are likely to cause only loss to a party and not profit from it. A person is surrounded by many pure risks in relation to property and life. It affects not only the individual but also the society, it is not possible to measure all these risks but most of the risks can be measured and are insurable risks. Example – fire in the factory, fired from the job, break of the painter’s hand etc.
      2. Hypothetical Risks – Risks in which both profit and loss are likely to exist. Information is not available regarding the occurrence or non-occurrence of these risks, so they cannot be measured. There are presumptive risks in business dealings. Such risk takers can be both businessmen and speculators.

The life of individuals is surrounded by many types of uncertainties and risks. He has some property related risks and sometimes life is at risk, so the idea of ​​how to get protection against these risks has made insurance a necessity. If insurance is said to be the basis of current industrial development, directly and indirectly, then there will be no exaggeration. Insurance has become an important necessity to make human life stress-free. The need for insurance can be estimated on the basis of the following points.

1. To get protection against risks – Assets are insured because there is a constant possibility of their destruction or that they may become inactive before their expected life due to the occurrence of a contingency.
2. To get protection from potential risks – The insured may or may not be subject to damage, an earthquake may or may not occur, may or may not cause damage to the property in the event of an earthquake. Man’s death is certain but the time when death will happen is uncertain, so insurance has become a necessity to get protection from this uncertainty or potential risks.
3. To reduce the effect of risks – but insurance never provides protection to the insured subject, does not prevent the loss caused by the hazard. Sometimes the danger can be avoided or the intensity can be reduced by better safety and preventive measures so that the effect of the danger on the life and property of the persons dependent on the subject must be minimized.
4. To get rid of the need for additional capital for security – Insurance frees industrialists, businessmen and other persons from investing capital for security. The risk is capped to that extent by paying a small premium. Therefore, the money invested in this arrangement can be used elsewhere.
5. Necessary for the development of large scale enterprises – There is so much risk in large scale enterprises that it is not only difficult but also impossible to start without insurance.
6. For obtaining finance from financial institutions – Finance is also provided by financial institutions to these industrial and business institutions only when their properties have been insured. Therefore, insurance is also necessary to meet huge financial needs.
7. Necessary for foreign trade development – Insurance is also necessary for the promotion of export business. Insurance provides complete protection even in the event of loss of value of the goods and by which exporters can export free from the uncertainty of injury.
8. To encourage savings and investment – Life insurance is a good source of savings and investment. To cover the uncertainties of life through insurance, insures more amount, which encourages savings by reducing wastage.

With the development of civilization, the importance of insurance is also increasing, because risks, accidents and uncertainties are increasing, today we cannot imagine a country which is not taking advantage of insurance. Today, insurance has moved from its initial form to social and business world and has been gaining popularity on the basis of its usefulness. Impressed by the usefulness of insurance, the British Prime Minister, Sir Winston Churchill, had said, “If I am under my control, then I should get it marked on the door to door to be insured.” Insurance benefits the whole of mankind and all the sections related to it socially and economically. delivers. In short, it can be said that the importance of insurance is increasing day by day and quadruple in the modern era. The importance or benefits of insurance can be understood by the following classification.

1. Importance from individual or family point of view – Insurance can have the following benefits at the individual level.
   1. Promotion of thrift and savings – By taking insurance, a person is worried about depositing interest, so he starts saving and adopting frugality from the very beginning. Pro . According to Regal Miller and Williams, “Insurance provides an environment that encourages savings.” If he has not paid the premium, he can also waste that money. Crores of rupees per year under the savings scheme. Premium is accumulated, which is possible only through the habit of saving.
   2. Protection from risks: – Not only the life of man, business is also full of risks, insurance removes those uncertainties. Pro . According to Engel “Insurance is the permanent basis of protection from uncertain losses. Business and industry have developed due to insurance and the risk arising to the employment of the person is also eliminated.”
   3. Investment – Investment element is also present in life insurance. The person who deposits the amount as premium. That is his savings. On the completion of the specified period or the occurrence of a certain event, the insured or his heirs get a fixed amount. Thus, insurance becomes a means of investment as well as protection for the individual.
   4. Complete protection to the insured and his heirs – By insuring the insured and his heirs get complete statutory protection. Before death, the insured can nominate a letter of insurance in the name of the desired person, so that family wealth, disputes related to distribution can be resolved and the heirs are also completely safe.
   5. Exemption in taxes – Insurance also gives exemption in taxes. Income tax exemption can be availed on the amount of premium paid in India. Similarly, there is also an exemption in wealth tax.
   6. Capitalization of Income Potential: – Through insurance, a person can also capitalize his income potential. He can also capitalize his income by insuring the amount he can earn in future. If the insured dies. Or even if the functionality is lost, the same amount can be received on the insurance letter.
   7. Credit facilities – Lenders prefer to give loans to such persons who are insured. Financial institutions also want to give loan to the insured person only. Apart from this, credit facilities can also be obtained from the insurance company.
   8. Freedom from Statutory Liabilities – A person can get freedom from his liabilities towards third parties by taking statutory liability insurance. The insurance company will pay those liabilities in lieu of the fixed premium.
   9. Increase in efficiency – Uncertainty is the biggest concern of life and insurance gives freedom to individuals from that uncertainty. When a person works without worry, then he is able to work with full concentration, due to which his efficiency increases.
   10. Mental peace – When a person becomes free from uncertainties, he works with a happy mind. He does not even worry about the liabilities arising after death because he has already insured them at present.
   11. Promotion of self-reliance – A feeling of economic self-reliance is created in the insured. A person can easily get loan even in the living condition and even after death, the dependent family gets financial independence by getting the sum insured.
   12. Planning of future needs – Many types of insurance letters like education, marriage, pension etc. are issued by the insurance company. A person prepares for the future from his limited income in the present, that when, on what need, how much amount will be required. On this basis, he can be successful in selecting those special insurance policies, even after death, he can fulfill the needs of the family in a well planned manner.
   13. Promotion of Vigilance – Insurance companies keep on giving many protective tips to avoid losses. With these protective measures, human life becomes more secure, he takes measures to avoid various diseases from time to time. In compensatory insurances, premium discount is also provided for adopting vigilance measures and presenting less than normal average payers which ultimately reduces the cost of insurance.
   14. Increase in social prestige and self esteem – Insurance increases the self esteem and prestige of a person in the society. The people who are insured, the society respects them as more secure, they do not have to look at others in times of trouble, they can also easily get a loan on the insurance letter.
   15. Support in old age: – At present, while the joint family system is disappearing, insurance is becoming a support for the old age of the person. In old age the sources of income become limited and the responsibilities increase, in such a situation the money received from Bina becomes his main support.
2. Importance from business / economic point of view – The imagination of the present economic world is incomplete without insurance. The businessman makes a plan to get the insurance done so that he can complete the business activities with complete peace and calmness. According to the eminent management thinker Peter F. Ecker, “It is not an exaggeration to say that without insurance the industrial economy cannot function. The real situation is that insurance is indispensable for the successful operation of business. The importance of insurance from an economic point of view.” It is visible as follows:
   1. Incentive to Savings – Insurance is a means of essential savings. Insurance encourages the habit of making small savings in the people. By small premiums, they can easily fulfill many big dreams of the future The insurance company receives a premium amount of crores of rupees from the small savings of these insured, which accumulates to become a huge amount, which the insurance company after meeting the necessary expenses, in the schemes of social and national interest.
   2. Capital formation – When the insurance company invests the amount of return received from the insured in various national schemes, then business and business get capital easily, and many people get employment. Happens also.
   3. Instrument of investment – Capital is created from the amount received in the form of premium in the insurance contract, this capital is invested in business, business, industry and other areas. The public cannot directly get profit by investing such a small amount in business, but through this indirect investment, the insured get more bonus on the insured, as well as the economic development of the nation.
   4. Increase in trade and commerce – Insurance provides protection against various types of risks, which increases both domestic and foreign trade. The origin and development of insurance is basically in the form of marine insurance. By which protection was provided to risky commercial sea voyages, then fire insurance developed, in which measures and insurance for fire protection of factories, warehouses, offices and other properties were started. With protection from such losses, businessmen do business with certainty without fear and insurance helps as a true friend when risks arise.
   5. Helpful in the development of infrastructure for industrialization – Insurance institutions provide huge amount of funds for the development of means of power, transport, communication, industrial estates etc. in the country, which prepares the infrastructure for industrialization in the country.
   6. Growth of Large Scale Businesses:- Insurance has paved the way for the growth of many large businesses. Pro . Magee has also written that without insurance the existence of large business entities cannot be possible. The insurance company not only provides finance for these huge business entities but also provides protection at very low premiums.
   7. Development of small and cottage industries: – The means of large scale industries are also wide. They can bear the accidental loss, but if any risk arises in the small scale industries, they cannot face it and their existence ceases to exist, but these industries are protected by insurance, so they Conduct business with absolute certainty.
   8. Development of Entrepreneurship – Entrepreneurship is developed through insurance, because the risk of entrepreneurs is reduced by having insurance of business and industry. They start new business with full confidence and certainty. Loans are also obtained on easy terms by financial institutions. Many young people with technical and professional education are setting up many big enterprises.
   9. Development of Service Sector Enterprises – At present, service sector enterprises are developing in all the countries. The success of these enterprises depends on the quality of the services they provide. These organizations also provide liability insurance to limit the risks. This is contributing substantially to the development of these enterprises.
   10. Promotion of foreign trade – There are many risks in foreign trade, such as the risk of shipping goods by sea, the risks arising out of diplomatic relations between the importing and exporting countries, etc. By getting protection from the insurance company, the businessman can avoid the risks of foreign trade.
   11. Stability in partnership business – The death of a partner in a partnership firm or any sudden risk arising may cause great trouble in the firm. In order to deal with such crises, joint insurance of the partners can be done so that in the event of the death of a partner, his share can be paid from the firm and on the other hand, due to non-fulfillment of the sum insured, the personal insurance of the partners can be done. The needs are easily met.
   12. Development of Employment Opportunities – Employment opportunities develop in the country through insurance business. Insurance expands business and industries in the country, due to which people get employment for working at many levels in it. Due to the insurance business, various types of insurance such as marine, fire, accident, life, and other types of insurance are expanded, due to which a large number of employees and agents are appointed in the insurance organization itself.
   13. Helps in business stability – Insurance lays the foundation for business stability in the country. The reason for this is that business risks can be limited through insurance, which creates favorable conditions for business development in the country and brings business stability.
   14. Protection from loss of important persons – Life of some important persons is invaluable for every organization. Organizations earn profit because of the reputation, ability, management tact etc. of those individuals. In the absence of those important people, the organization is in danger, so to save the organization from this financial danger, these important people are insured. In the event of the death of these persons, the organization receives compensation from the insurance company.
   15. Promotion of protection methods – The insurance company insists on adopting protection methods to the insured. The organization which adopts these measures is also provided a discount in premium.
   16. Determining the cost of accidents:- Some accidents are big and some are minor. If the cost of these accidents is added to the cost of the commodity, then the costs will increase greatly and that entrepreneur will be left behind in the competition. Therefore, the uncertainty of these accidents can be converted into certainty by insurance.
   17. Protection of employee’s interests – There are possibilities of both profit and loss in business. The loss situation has a bad effect on the employees and they may even have to be fired. If business organizations insure gratuity, pension, and other benefits for the employees, then their interests are protected.
   18. Easy management of employee protection schemes – According to the laws of the country, many schemes for the welfare of the employees such as pension, gratuity, sickness benefit, protection of income of dependents on disability or death, benefits on pregnancy and child birth, etc. Through insurance such as a group insurance scheme, it is met by operating social security schemes. It can also fulfill legal obligations.
   19. Contribution to Human Resource Development – Training programs for agents are conducted by insurance institutions which contribute to their personality and skills. Not only this, but it also trains the officers and employees of the insured institutions for the maintenance and protection of the assets. This contributes to human resource development.
3. Importance from social point of view – Insurance is an important tool for stability in society and for solving social problems. There are many benefits to the society from insurance which are as follows:-
   1. Means of social security – Insurance provides social security. By taking insurance, a person becomes free from his worries. Life insurance provides social security to dependents in case of old age, disability, illness and death. One can get protection from fire insurance, protection of valuable properties, industrial institutions, while marine insurance can get protection from road difficulties and damage to goods. Due to these protection elements, insurance is becoming important in every sector of the society.
   2. Transfer of Risks – Through insurance, the risks of one person insured are divided into groups of many persons. The liability of damage does not rest on the insured or on any one person but is distributed to the whole group (insurer) which is beneficial for the whole society.
   3. Stability in family life – Stability in the family can be brought through insurance. When the head of the family dies, the whole family life gets disturbed. But through life insurance, a person can provide stability to the family even after death.
   4. Protection from family disintegration – Joint family itself provides protection similar to insurance, but in nuclear families, if the head dies, then his widow, wife and children have the full responsibility of the family. In such a situation, not all are able to give full attention to maintaining family relations. Many a times, due to the busyness and mourning of the mother, the children also go on the wrong path. But due to timely availability of insurance amount from life insurance, the family contributes to the development in a pre-planned manner.
   5. Social satisfaction – Insurance benefits all sections of the society, so a sense of social satisfaction flourishes in the society and social satisfaction remains.
   6. Symbol of social prestige – Insurance is also considered a sign of social prestige in today’s era. The more and more suitable the person who insures his life and property, the more he is considered prestigious. Society is educated and advanced.
   7. Prevention of social evils – Through insurance, economic certainty comes in the life of the individuals, so that the dependents are not destitute even on the death of the person. Similarly, other indemnity insurance also protects the assets of the person. Therefore, when the risk arises, his economic and social condition does not deteriorate and social evils do not even take birth.
   8. Promotion of education: – Education is also encouraged through insurance. By purchasing education insurance, parents can make proper arrangements for the education of their children.
   9. Promotion of Vigilance – Insurance also encourages people to be vigilant in the society. Insurance companies waive insurance premium amount for properties which adopt caution measures and submit claim amounts below the normal average. The insurance company itself also keeps apprised about the vigilance measures from time to time.
   10. Development of Civilization and Culture – The criterion of how civilized, cultured and developed any society is, is its insurance system. The country in which there is no development of insurance is considered backward. Along with the protection of social assets, insurance protects the human and basic assets of the society. The insured has to make arrangements for the protection of these resources as per the conditions mentioned in the insurance contract. Apart from this, insurance companies also provide public education about the safety of the insured subject. As a result, social assets are protected through insurance.
   11. Development of employment opportunities – Insurance also increases employment opportunities in the society. There are several thousand employees in different positions and many insurance agents are also working in insurance companies. According to an estimate, about 85000 employees are employed in General Insurance Corporation and its subsidiaries and about 1.25 lakh employees in Life Insurance Corporation. Not only this, more than five lakh agents of Life Insurance Corporation are also working.
   12. Contribution to social upliftment works – The development of the country is incomplete without social upliftment. Poverty and economic inequality have to be removed for social upliftment. The insurance company insures the unorganized people in the social sector such as workers, khatis, cobblers, blacksmiths etc., economically poor backward people, people in the informal sector such as self-employed persons – retail traders, tap – electricians etc. Is . The insurance company insures these persons on its own behalf and also with the cooperation of the Central and State Governments such as Janashree Bima Yojana. The Insurance Regulatory and Development Authority has also made it mandatory for all insurers to insure the backward people of the social sector. According to the rules of the Authority, for every new insurer, 5000 such lives in the first year and this number has to reach 20,000 in five years.
   13. Protection from civil liability – Many industrial establishments have to use many hazardous chemicals and gases, hazardous wastes are also generated, industrial manufacturing process can also be dangerous for the people around. Such entities get their civil liability insurance and are protected from the effects of risk.
   14. Improvement in standard of living – Insurance gives an opportunity to the people to save and transfer the risks to the insurance company. Due to this, the economic condition of the people is balanced and additional means can be used to improve the standard of living.
   15. Promotion of charitable work – Individuals want to donate to an organization in their old age or after death, but they also want to have financial security of themselves while alive, in such a situation, they buy insurance and enroll it in the name of the institution to which they are living. donation is to be made. On the death of the insured the nominee gets the payment of that insured.
   16. Health awareness – Insurance companies also conduct many types of tests while doing insurance, due to which many diseases are known. It also distributes educational material to maintain good health. All these measures create health awareness among the people.
4. Utility from the national point of view – Insurance benefits not only the individual but the entire nation. The details of which are as follows.
   1. Increase in National Savings – Every person saves for getting insurance. These small savings add up to the total national savings.
   2. Contribution to the development of the money market – The large amount of insurance premiums also contributes to the development of the money market of the country. As a result, trading of short term and long term securities becomes easy. Government banks and companies, all can get and invest money as per their requirement immediately.
   3. Protection from natural hazards – Insurance facility is providing protection from various types of natural hazards to all the components of the economy. Insurance companies insure fire, storm surge, sea route risks, coastal areas risks etc. and provide national security to those people and contribute in furthering the pace of economic development of the nation.
   4. Control of inflation – Money collected in the form of insurance premium prevents the spread of money in the market, later this money is used in the development of industries. About 5 percent of the total currency in circulation in India is collected in the form of insurance premium.
   5. Promotion of investment – Through insurance, a person buys various types of insurance by collecting small savings, a certain percentage of that premium amount is invested in industries.
   6. Contribution to Foreign Exchange Fund – Insurance business is also carried on abroad by insurance institutions. Foreign exchange is earned from insurance business abroad.
   7. Development of Stock Exchange Centers – Insurance company also invests a part of its accumulation funds in stock exchange centers and actively participates in stock exchange business, hence the development of stock exchange centers also takes place.
   8. Availability of capital to large scale industries – Insurance companies buy shares and debentures of industries from their accumulation funds, due to which these industries get both long-term and short-term share capital in large quantities.
   9. Contribution to economic projects by investing in government securities – Insurance institutions have contributed significantly to the economic development of the country by investing in securities of the Central Government and State Governments and other securities with guarantee by them. The amount invested in these securities is spent in completing the economic projects of the country. Due to which the economic development of the country takes place.
   10. Promotion of medium and small businesses – These institutions can insure the entire business and pay full attention to the efficient operation of the business. Banks and financial institutions also provide loans on the basis of insurance. These small and medium businessmen contribute to domestic and foreign trade as well as increase the total national output and income.
   11. Promotion of employment in the country – Insurance company directly and indirectly promotes employment in the country. She herself provides employment to many people and the institutions insured by her are also increasing the total national income by creating employment.
   12. Promotion of Risky Activities of National Importance – Insurance has given incentives to take up a number of activities which involve high risk. For example, insurance is cooperating in risky work like world-class sports competitions, testing of modern military equipment, spacecraft and laboratories etc.
   13. Continuity in national income and production too – Insurance also contributes in maintaining the continuity of national income. Due to many natural and man-made reasons, many industries, businesses, ships etc. are destroyed every year, from which the government receives direct and indirect taxes, employment to lakhs of people and production of goods and services worth crores of rupees, if they are not insured then Most of these units will not be able to be resettled and unemployment will spread. But due to insurance, these industries are re-established and there is continuity in national income and production.
   14. Contribution to the overall national development – All the components of development of industries, development of employment opportunities, more savings and capital formation etc. contribute to the overall national development. Seeing the above benefits and importance of insurance, we can say that – “Insurance has the same qualities as kindness. In this both the insurer and the insured are fortunate and insurance proves helpful from birth to death.”

Insurance is very important in a life full of uncertainties and apprehensions, today insurance has become the primary need of the entire business world and human community, yet insurance has some limitations due to which the desired benefits of insurance are not available. Some of the limitations of insurance are as follows –

1. Not all risks can be insured – There are many risks in life but it is not possible to insure all, only pure risks can be insured, hypothetical risks cannot be insured can.
2. High Premium Rates – There is no special interest of the people towards life insurance in the country. Vehicle insurance is also done due to legal imperative. Insurance of big factories is prevalent but insurance of house, shop, theft etc. is not much in vogue. The main reason for all this is the high insurance premium.
3. Moral hazard – Some people who are insured also misuse the insurance. The success of insurance becomes doubtful due to moral vulnerabilities of the person in the following circumstances .
   1. Some people want to overuse the insurance service like staying in the hospital for more time than necessary because the insurance company is paying.
   2. Some people charge higher remuneration for rendering their services to the life and property insured. Example- Excess fee charged by the doctor from the insured patient.
   3. Negligent use of the property insured.
   4. Overstatement of loss by the insured.
4. Insurance is not a profitable investment – Insurance is an investment as well as protection, but it is also not a very attractive investment. The return from this is less than other investments. In indemnity insurance, the person has the right to receive only the actual damage. Hence it is not considered as an attractive investment.
5. High operating costs of insurance – Insurance companies spend about 20 percent of the premium on their own operations. This ultimately leads to an increase in premium rates.
6. The extent of risk of an individual is not comprehensive – The success of insurance is possible only when there is a large group of persons exposed to similar risks. If only one person or very few persons are at risk, it is not possible to insure them.
7. Insurance limited only to the financial value – Insurance is possible only if the actual loss of an event that is happening can be measured in money. Thus, it is not possible to insure only material losses, but both measure and insure compensation for non-monetary losses such as mental pain, harassment, stress, anxiety, etc.
8. Some insurance policies rely solely on government support – Private insurers cannot insure certain types of risks, requiring government support. Like unemployment insurance etc.