Insurance: Best Way to Insure your Business against financial loss and tips to pay less, Definition, Types of Insurance, Importance of Insurance, Limitations of Insurance – Life can be unpredictable at times. A smooth sailing life can face abrupt disruption in the event of an unexpected circumstance like a fire outbreak, terminal illness or the death of a loved one. One decision that can certainly mitigate the effect of these events is being enrolled in an insurance scheme.
- 0.1 DEFINITION OF INSURANCE
- 0.2 TYPES OF INSURANCE
- 0.3 IMPORTANCE OF INSURANCE TO AN INDIVIDUAL, FAMILY AND SOCIETY
- 0.4 LIMITATIONS OF INSURANCE
- 1 Insurance: Best Way to Insure your Business against financial loss and tips to pay less
DEFINITION OF INSURANCE
Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter.
TYPES OF INSURANCE
- Life Assurance or Personal Insurance
- Property Insurance
- Marine Insurance
- Fire Insurance
- Liability Insurance
- Guarantee Insurance
- Social Insurance
- Health insurance
- Motor insurance
IMPORTANCE OF INSURANCE TO AN INDIVIDUAL, FAMILY AND SOCIETY
Insurance has evolved as a process of safeguarding the interest of people from loss and uncertainty. It may be described as a social device to reduce or eliminate risk of loss to life and property.
Insurance contributes a lot to the general economic growth of the society by provides stability to the functioning of process. The insurance industries develop financial institutions and reduce uncertainties by improving financial resources.
- Provide safety and security:
Insurance provide financial support and reduce uncertainties in business and human life. It provides safety and security against particular event. There is always a fear of sudden loss. Insurance provides a cover against any sudden loss. For example, in case of life insurance financial assistance is provided to the family of the insured on his death. In case of other insurance security is provided against the loss due to fire, marine, accidents etc.
- Generates financial resources:
Insurance generate funds by collecting premium. These funds are invested in government securities and stock. These funds are gainfully employed in industrial development of a country for generating more funds.
- Life insurance encourages savings:
Insurance does not only Protect against risks and uncertainties, but also provides an investment channel too. Life insurance enables systematic savings due to payment of regular premium. Life insurance provides a mode of investment
- Promotes economic growth:
Insurance generates significant impact on the economy by mobilizing domestic savings. Insurance turn accumulated capital into productive investments. Insurance enables to mitigate loss, financial stability and promotes trade and commerce activities those results into economic growth and development. Thus, insurance plays a crucial role in sustainable growth of an economy.
- Medical support:
A medical insurance considered essential in managing risk in health. Anyone can be a victim of critical illness unexpectedly. And rising medical expense is of great concern. Medical Insurance is one of the insurance policies that cater for different type of health risks. The insured gets a medical support in case of medical insurance policy.
LIMITATIONS OF INSURANCE
This has to do with the maximum amount of money an insurance company will pay you for a covered loss. You’ll typically find that the higher your coverage limit, the higher your premium may be. Limits often apply to different types of coverage within a policy..
The insurance industries in Nigeria is quite interesting and this sector has evolved rapidly in the last few decades.
Insurance policies started as far back as the colonial period. At that time, they were of European origin. However, a couple of years before independence, the first indigenous insurance company in the country was formed. It was the African Insurance Company Limited and it was established in 1958. And till date, many more insurance companies have been established.