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Definitions of Insurance Explained A to Z

Definitions of insurance – Are you struggling with searching Basic Definitions of insurance – Now you are in right place. let’s see; Not a single moment of human life has been risk-free since the dawn of human creation. Then when people unite and learn to acquire wealth, these resources also fall into the risk.

Definitions of Insurance
Definitions of Insurance

What is Insurance?

In the beginning, man did not think about the security of his own life and property, when education and culture began to develop, people started thinking about the security of their own life.

As a result of this thinking, the first insurance system to be introduced was called naval insurance. Then, based on human needs, civilization, and economic activities, fire poisoning, life insurance, and other insurance started to be introduced in phases. The insured ensures the safety of human life, peace of mind, the inclination of the soul, etc.

On the other hand, insurers take the risk of the life and property of others for the purpose of making a profit, capital formation, expansion of industry and trade, creation of employment, business risk, and removal of uncertainty.

Concept of Insurance:

Mr. Tanvir Rahman after finishing his studies gave a soap-making factory in his area. About 100 workers work there. A few days later, a worker was seriously injured while going to work. A risk-taking company paid the worker about Rs 1,00,000. After receiving the money, the injured worker completed his medical treatment. This means that the factory owner entered into an agreement with a risk-taking organization for the safety of the workers. The insurer paid the worker as per the terms of the contract.

In other words, Mr. Tanvir Rahman has executed an insurance contract with the insurance company for the safety of the workers. There is a saying in English, ‘Future is always uncertain’ which means the future is always uncertain. And whether it is in human life or in business. Uncertainty exists in every moment of human life. Because he can’t tell what will happen in the future.

At any moment, for any reason, human life can be endangered or business – trade can be a big loss. And the only way to get compensation for this loss is insurance. Marriage is a financial defense against the risks and uncertainties that surround human life and property. Insurance originates from risk. Insurance has two sides – one is the insurer and the other is the insured.

So insurance is a kind of contract executed between the insurer and the insured. Under the terms of this agreement, the insured assigns the liability to the insured in whole or in part or for certain risks in exchange for a fixed premium or subscription to one or more risk-bearing companies.

According to the terms of the insurance contract, if the insured is damaged, the insurer is obliged to pay compensation as per the terms of the agreement. let’s see now Definitions of insurance:

Definitions of insurance:

According to Professor MK Ghosh & MN Agarwala, “Insurance is a cooperative form of distributing a certain risk over a group of persons who are exposed to it.”

According to Professor MN Mishra, “Insurance is that in which a sum of money as a premium is paid in incurring the risk. Insurance is a contract that takes the risk of paying a certain amount of money for a contingency in exchange for paying a certain amount of money as a premium in return for paying a large sum upon a given contingency.”

According to Professor Morgan, “Insurance is the agreement of a community to consider the good individual members as common.”

Definitions of insurance More explained below –

Importance of Insurance:

Importance or Necessity of Insurance – Insurance is one of the modern tools to protect against unwanted and potential risks and uncertainties. Therefore, the role of insurance in the economic and social development of a country is very important. In developing countries, the insurance system is identified as a tool for development. The importance and necessity of insurance are discussed below from different perspectives:

A. Importance of Insurance in Personal Life:

Insurance plays an important role in various aspects of human personal life. The importance of insurance in personal life is discussed below:

1. Brings financial safety: The future is always uncertain or undesirable. This unfortunate event causes the family members to face financial problems due to illness, disability or physical disability, and death in their personal life. And insurance provides security against this financial problem. Therefore, the role of insurance is very important in providing financial security in the life of an individual by providing financial security.

2. Creation of savings: Insurance makes people live. As a result of purchasing an insurance policy, the person has to pay a premium compulsorily at certain intervals. It builds the savings of the individual. In the case of life insurance, in particular, the savings of the insured are created.

3. Profitable investment: Insurance provides the benefit of profitable investment to the individual. There are many people who do not want to take the risk of investing money in business. As a result, they invest their savings in insurance and get their money back with a profit over a period of time. As a result, he can live comfortably.

4. Brings of mental satisfaction: Insurance seeks to provide peace of mind. Even if the family mourns the death of a person, insurance provides the necessary financial assistance so that no financial crisis can touch that family. As a result, getting financial help brings peace of mind among the family members. Introduces

5. Reducing dependence: Insurance is important in reducing the dependency of the individual’s life by making the person self-reliant. As a result, he does not become dependent on anyone

6. Security of old age: The burden falls on the family. So term insurance, scholarship insurance serves as an important support for people’s old age.

7. Family needs: Insurance plays an important role in family needs because insurance pays for the education of the children as well as the cost of marriage. This can save you from anxiety.

B. Importance of Insurance in Business:

Insurance plays an important role in people’s personal life as well as in business. The case of business insurance is discussed below:

1. Removal of hindrance due to risk: In business, risk uncertainty is inherently involved. Helps eliminate these risks and uncertainties that exist in the insurance business. In business, there are risks and uncertainties at different stages of the production and distribution of goods. In other words, in the case of the insurance business, by removing these risky obstacles, the trader helps in executing the transaction.

2. Protection of business concerns: Insurance guarantees all types of businesses a certain premium in the event of a loss by promising future accidental compensation. As a result, businesses are protected from inevitable collapse.

3. Labor welfare: Through group insurance, workers can get rid of their danger or accidental loss. In case of the untimely death of the worker, accidental old age due to accident, etc., the insurance company provides life insurance, accident, and sickness allowance, pension facility, etc. in return for a very low premium. As a result, the welfare of the workers is achieved.

4. Expansion of international trade: In addition to domestic trade, insurance also helps in the development of import-export trade. The import-export business is constantly expanding in the context of increasing international mobility of commodities through naval insurance. Basically, foreign trade is absolutely impossible without insurance.

5. Creating Entrepreneur: Many investors do not want to start a new business venture due to the risk involved in the business. But the removal of risk barriers in the insurance business has encouraged many investors to invest in the business, creating new entrepreneurs. Which is helping to build new industries and factories in the country.

C. Importance of Insurance in Economics:

Insurance also plays an important role in the economic life of the people. The importance of insurance in the economic field is discussed below:

1. Formation of capital: The main tool of investment is capital. The more capital there is, the more investment there will be. And if the investment is more, the profit will be more and as a result, the national income of the country will increase. Will get The premium deposited in the insurance company becomes long-term capital which is the business of the country. He is also engaged in the industry.

2. Creation of employment opportunities: Insurance companies, directly and indirectly, create employment opportunities for these people in the country.

In other words, on the one hand, the company itself employs a lot of people to work in the office field, and on the other hand, the insurance money is invested in various businesses – trade and industry establishments, there are job opportunities.

D. Importance of Insurance in the Social Sector:

Insurance plays an important role in the economic development of the people as well as in various social development activities. The importance of insurance in the social field is discussed below:

1. Social welfare: Insurance not only provides financial compensation for the damage caused, but also contributes to the financial security of personal life, compensation, and protection of social and national assets. Insurance contributes to the well-being of the country and society through the development of the individual, asset security, inflation prevention, education, health, and medical sectors.

2. Protection of National Resources: Insurance plays an important role in the protection of national resources. It provides security measures to prevent possible damage to various assets and properties of the country and tries to keep the damage to a minimum. As a result, national resources are protected from destruction.

3. Improvement of the living standards: Insurance creates employment opportunities for many unemployed people in the country.

As a result, the unemployment problem of the country is solved. Moreover, the insurance system also provides income to the insurer and the insured. Which increases the national income of the country as well as improves the living standards of the people of the country.

In conclusion, the importance of insurance in all spheres of personal, family, social, economic, industrial, business trade is immense. No field is safe without insurance. Especially business – not to worry about trade and industrial production.

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