LIFE INSURANCE

A human being is an income generating asset, besides many other things, to his family and dependents. His capacity to generate income depends upon his education, professional skills, managerial abilities, entrepreneurship etc. The value of the asset is measured in terms of the income generated. Human asset can be lost through unexpected death, sickness or disabilities caused by accidents. Accidents may or may not happen, but death is certain; only its time is uncertain. Premature death stops the means of life of his dependents, and hence has to be protected against. Accidents or unexpected illness my again impair the person’s ability to earn and necessitate extra expenditure of medical bills etc. Even retired people who had made plans for steady income 20 or 30 years back find that inflation and changes in life style have made their income too inadequate. In all such cases life insurance is the only way to ensure protection.

Life insurance is a means of social security. In modern societies social security to the population is provided by the governments or by themselves. If the bread winner of a family dies or disabled, his family will become destitute unless the government provides social security to them. Life insurance provides at least partly to this eventuality and lessens the burden of the state.

Life insurance plays a significant role in the economic development of the country. Life insurance companies collect huge amounts of money as premium from their policy holders. This money, after setting apart a part for payment of claims, is generally invested in various economic activities like infrastructure development, health care, housing, power generation etc.

The major benefits of life insurance may be summarized as below. 1) Life insurance is the only way of protection of families from risk. All savings or investments give back the sum we have saved plus interest. But insurance pays a sum one wishes to have at the end of the savings period of 20 or 30 years. The final fund is secured from the very beginning and we pay for it in small amounts over the years. This assured fund is not affected by inability to pay due to death or disability. Hence there is no substitute for life insurance. 2) Life insurance is the only way to safeguard against the unpredictable risks of the future. 3) The value of human life is much greater than the value of properties or savings. Only insurance can preserve it. 4) Life insurance surpasses any other savings or investment in terms of security, marketability or stability of value. 5) Life insurance helps people live financially improved lives.