How insurance protects value of life?

How insurance protects value of life?

The main economic problem which arises when someone in the family
dies, is the loss of earnings of the deceased person. In a business firm if a
key employee dies, the firm may lose valuable customers whose loyalty
depends on this individual. The value of human life, apart from death, may
be diminished through loss of health by way of loss of earning due to
liability and expenditure for medical care. Old age is another peril which
affects earning capacity, just as premature death or loss of health.
The uncertainties of life are such that no man can say how long his
Life will last and every prudent and considerate person desires to make
me provision for his dependents in the event of his death. The
fundamental economic purpose of life insurance is to mitigate such
possible loss. It covers the risk of death as well as meets the savings need
when the benefit is payable in the event of survival.

 

How Life Insurance schemes meet the saving needs?
The purchase of life insurance leads itself to a regular, consistent
savings plan. The plan fits the psychological needs of many savers for a
regular savings plan with a semi compulsory flavour. As premium
becomes due they are looked upon as any other bill and are more or less
automatically paid.

How insurance protects value of life?

Annuity contracts arc also used as means of savings. A life annuity is the
reverse of the life insurance. It is often said that whole life insurance is insurance
‘against dying too soon” and the annuity is insurance against “living too long”. As
one can not know how long he will live after retirement, it has become an useful
practice for many people to buy annuity. Under the annuity an insured receives a
cerrtain smaller income in return for an uncertain but larger income.

How insurance protects value of life?