Discuss the importance of life insurance.

Solution

1. Protection against premature-death : Life insurance provides protection to the dependents of the assured in case of his untimely death. The dependents or family members get a large sum in case of the death of their breadwinner. They are saved from economic hardships to a great extent.

2. Protection for old age : Through life insurance, a person can make provision for his old age. After retirement the earning capacity of a person is substantially reduced. He cannot maintain his standard of living without substantial savings. Life insurance enables a person to enjoy peace of mind and a sense of security.

3. Funds for investment : Life insurance corporation mobilises the public savings and channelises them in productive investment for the economic development of the country. Life insurance combines both protection and investment.

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