The world is full of uncertainties, and it’s impossible to know what will happen next. Insurance ensures that the economy is stable. It reduces possibility and covers any risks that arise from the economy. The following are the reasons why insurance is essential.
- Safety and Security
Insurance companies offer financial support in case of any risks. It ensures that you are safe from any potential events that may impact your life and business negatively. Insurance secures you from any sudden loss. Insurance can cover losses such as death, accidents, among others.
- It creates financial resources
There are many insurance companies out there. These companies employ a lot of people, promoting capital formation. Also, these companies generate funds from premiums. These funds help the government to facilitate the economic growth of a country.
- Encourages Savings
Apart from providing immunity against uncertainties and risks, insurance offers a saving channel. For instance, life insurance allows an individual to save by paying premiums. The individual will receive a lump sum when the contract matures. Insurance help instill the saving habit into society. People can invest in other projects when their contract matures.
- Insurance spreads the risk
Insurance company collect premiums from a lot of people and uses the money to cover a particular risk. Recovering from risks is hard for individuals. Note that risks are compensated from the funds of the insurer. Therefore, insurers ensure that an individual doesn’t carry the burden by themselves but as a group.
- Boosts economic growth
Insurance plays a vital role in economic growth. It mobilizes savings and converts capital into investments. Insurance also helps businesses recover from losses. It promotes trade and financial stability, enabling the economy to grow.
Insurance is the only way of protecting yourself from uncertainties. It can help you manage any health risks by paying your medical expenses.