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Secondary Functions

i. It prevents loss : The insurance joins hands with those institutions which are
engaged in preventing the losses of the assured and so more saving is possible
which will assist in reducing the premium. Lesser premium invites more
business and more business causes lesser share to the assured. So again premium
is reduced to, which will stimulate more business and more protection to the
masses. Therefore, the insurance assists financially to the health organization,
fire brigade, educational institution and other organizations which are engaged
in preventing the losses of the masses from death or damage.
ii. It provides capital : The insurance provides capital to the society. The
accumulated funds are invested in productive channel. The dearth of capital
of the society is minimized to a greater extent with the help of investment of
insurance. The industry, the business and the individual are benefited by the
investment and loans of the insurers.
iii. It improves efficiency : The insurance eliminates worries and miseries of losses
at death and destruction of property. The care-free person can devote his body
and soul together for better achievement. It improves not only his efficiency, but
the efficiencies of the masses are also advanced.
iv. It helps in economic progress : The insurance protects the society from huge
losses of damage, destruction and death; provides an initiative to work hard for
the betterment of the masses. The next factor of economic progress, the capital,
is also immensely provided by the masses. The property, the valuable assets,
the man, the machine and the society cannot lose much at the disaster.

Types of Insurances

Life Insurance
Life insurance contract may be defined as the contract, whereby the insurer in
consideration of a premium undertakes to pay a certain sum of money either on the
death of the insured or on the expiry of a fixed period. Life insurance is a financial
cover for a contingency linked with human life, like death, disability, accident,
retirement, etc. It is a contract between the policy owner and the insurer. Human
life is subject to risks of death and disability due to natural and accidental causes.
When human life is lost or a person is disabled permanently or temporarily, there is
loss of income to the household. Though human life cannot be valued, a monetary
sum could be determined based on the loss of income in future years. Hence, in life
insurance, the sum assured (or the amount guaranteed to be paid in the event of a
loss) is by way of a ‘benefit’. Life insurance products provide a definite amount of
money in case the life insured dies during the term of the policy or becomes disabled
on account of an accident.
Types of Life Insurance

i. Term Insurance : Under a Term Insurance, the insurance company pays a specific
lump sum to the designated beneficiary in case of the death of the insured.
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