In each and every part of the globe, small and big business is being set up. Be it of size or the sort of industry, they may far apart; organizations need to manage risks each day. Therefore, insurance could be an important tool for any business activity. Insurance does not just protect business and the nations wealth but it additionally guarantees protection to the people’s wealth too. To increase personal wealth, read more about QProfit system. Insurance is an arrangement of spreading the danger of one onto the shoulders of many. While it turns out to be almost unthinkable for a person to manage by himself every one of the troubles caused to his property or to his ‘stake’ in anything. In the kingdom of business, be it administrations, trade or industry, an expansive total of properties are utilized. Without a genuine hazard the board mechanism set up, the volume of vulnerability is the most extreme and the incredible ventures are at stake. By obtaining a protection arrangement this kind of hazard can be limited
Meaning of Insurance
The insurance means a contract between two person and parties, one known as insured and the other insurer, the insurer gives the fixed amount of money compensating the risk of loss or damage happening by certain events. The contract document is known as an insurance policy. The premium is the amount which agreed by the insurer to compensate the insured.
Major Types of Insurance
Depending on the risk, nature the insurance is broadly classified into,
- Long-Term Insurance
These types of insurance mainly include life and health insurance. Life insurance provides a protection against the uncertainty of life and also offers a financial security to the insured family. The health insurance is available in varies forms the main objective is to meet the medical expenses.
- General Insurance
It covers the loss or damage which has been happened in a home, car or a business. It gives security against the legal liability.
- Credit or Debt Insurance
It gives protection to the insured if he or she met an accident, illness or death and unable to repay the debt or credit.
Significance of Insurance
- It gives protection against the risk
- It helps in sharing of risk
- It provides protection against liabilities
- It helps insecure loans
- It develops economic growth
- Bring more employment opportunities
- It offers social security
The risk is the likelihood that a loss or damage will happen. It is very difficult to get away from numerous types of threats in today’s life. So risk management plays an important role in reducing the risk. It is the process of evaluating the risk that a person or a business firm might suffer from a threat and then reducing the cost which involved in that risk. Every threat involves two types of expenditures. The first is the cost that will bring about if the potential loss turns into a genuine loss. The second comprises of the expenses of lessening or wiping out the danger of potential harm. The risk management becomes effective when these two types of cost must be balanced.
How Insurance and Risk Management is linked Many people believe that risk management is simply purchasing insurance. However, insurance is an important part of risk management but it is not the main method for managing the threat. Different techniques might be less expensive in certain situations. Risk management help business to recognize the risk and identify the expenditures. Whereas insurance assists its customers with understanding dangers and manages it accordingly, decreasing the danger of any occasion that may pose a threat to business. So the insurance company gives help to its customers by proposing protection items that the business organizations purchase to feel secure