Insurance is known to have existed for centuries, as early as the 4000-3000BC. It is recorded that bottomry contracts were agreed between Babylonian traders. Similarly, it was practiced by the Hindus as early as 600 BC, this same concept was understood by ancient Greece by 400BC. Bottomry was a contract in which terms about a ship going for a specific journey or a given period its owner could borrow money and put the ship as security in case of any peril the lender loses his money. In 1666 after the Great Fire of London many insurance companies came into existence, like the Lloyd’s of London.
One of the natural wants in human nature after food, shelter and clothing is the hunt of security. Due to fluctuating economic situations existing in life there is possibility of losing the economic security, hence, the existence of insurance. Insurance can be seen as an agreement in which after a stated payment called the premium is made to the insurance company. The insurer can pay part or all of the loss that occurred or a fixed amount that was set at the beginning of the agreement is paid to the policy holder in case of an incident. Risk are of different kinds and so to with time the categories of insurance have spread to meet up with the security of humans some known insurances are life insurance, fire insurance, marine insurance, social insurance, miscellaneous insurance just to name a few.
Insurance ensures security
Insurance can be seen as a tool for security to the person insured if there is a lost in any event. If the person has life insurance he has a security in case of death and is secured against old age suffering. More to that in case of fire accident of his home fire insurance is there to put him once more under a roof. In the case of marine loses marine insurance cover the lost. If it happens that the individual has an accident or is sick and unable to work financial protection covers the person during that period. For people who engage into business ventures, insurance have their back as insurance can reduce business risk or losses. Looking at huge businesses, companies and industries in which high investment and machinery are used, just with the blink of the eye this investment can go to ashes due to human mistake. For a business man who has insured his business and suffers for health conditions which inhibits him of doing any business insurance will pay him in case of any perils.
Insurance is used as a tool by employers to meet up with the security and welfare of their employees, this is made possible when the employer takes in sickness and accident benefit, life insurance and pension which the insurance company assures the various points of need are met.The employer makes sure he regularly drops premium for the group of his workers, this way he meets up easily with his responsibilities. As a result of this the employees will give his best knowing he is secured.
Once an individual is insured he has peace of mind
This is because the human’s mind is full of fear, weakness, anxiety and lack of motivation associated with future uncertainty. Once there is a guarantee of a way out in case of trouble by an insurance company, there is generally a relaxed mode that bring peace of mind. In the same like, life insurance turns to encourage saving, the agreement in life insurance policy stipulates that the insured has to give in a fixed amount of premium regularly which cannot be withdrawn easily unless the term of payment comes to an end. Without knowing the insured accumulates wealth which can be used later. With the creation of insurance companies in a country, there is development because fear of lost in a business is dealt with thanks to insurance, the loss of capital and property to produce more wealth is secured so people will turn more into business which will boost up the economic growth of the country.
When an individual having an insurance coverage is to take a loan, the insurance policy can be presented and the credit will be easily given to him knowing that even if the person dies the policy can cover the loan.
Insurance can be used as a tool to reduce inflation in a country
Inflation is a situation of oversupply of money and a drop in the production of goods and services. Insurance uses two strategies to reduce inflation. Firstly, it collects regular premium which regulates the circulation of money and gives fund to the production section to balance the supply of goods and services.
Other Goals achieved by Insurance
Insurance provides protection against trade risk thereby encouraging foreign trade. By eliminating the loss of damageinsurance turns to increase efficiency. As a whole insurance goes a great deal to reduce the rate of unemployment in a nation as it offers direct employment to the citizens and encourages people to move in to business and employ others.
Insurance over the years has serve as a backbone to push up the economy of many countries and brings in more good to a nation. I personally recommend that every individual who is working should have a life insurance.