Insurance is the method by which an individual can transfer his or her risk to the insurance company which is willing to compensate for loss to the individual in the event of any risk being materialized. An individual has to pay premium in order to benefit from this service. Given below are some of the advantages of insurance –
- Peace of Mind – Biggest advantage of insurance is that it helps in providing peace of mind to the individual who is afraid of monetary loss arising due to unfavourable events like death, accident, illness, loss due to fire etc…
- Saving from complete breakdown – It helps the individual in recovering from trauma which happen due to sudden loss, for example a businessman who has shoe factory and if there is fire due to which whole factory gets burned down and if the businessman has not taken insurance than it can result in complete financial breakdown and that is the reason why insurance is taken so that such situations does not lead to complete breakdown.
- Saving and Investment – It is also used for saving and investment purpose because in majority of nations all over the world it is tax free and that is the reason why if you come under tax bracket it is beneficial to take insurance policy as it in many countries it is a tax deductible expense.
- Unlimited options – There is no limitation on the number of policies which an individual can take and therefore one can take different policies for different types of risks.
- Flexibility – These days there are many types of polices like a joint policy for the whole family or policy which has equity component or policy which provides pension and hence it gives flexibility to the individual desirous of taking insurance.