Describe the importance of Insurance to business.
The importance of insurance to business is discussed below:
1. Providing capital:
The insurance company receives insurance premiums from various individuals or organizations and invests the money in industry, trade, or commerce. As a result, by providing capital, the insurance company helps in the improvement and expansion of the business.
2. Social security:
Security measures for physical illness, old age, disability, and various social ailments can be taken through insurance. They get medical and other benefits. As a result, the safety of the workers and employees engaged in various trades is ensured.
3. Income tax benefits:
Under the Income Tax Act 1961, the taxpayer is given an exemption on taxable income. The assessee gets an exemption at a fixed rate on the amount of premium he pays.
4. A promise to bear the loss:
In case of any loss due to fire or other reasons, the insurer gets compensation. Dealing with compensation, the business gets security and becomes worry-free. This leads to the expansion of industrial trade in the country.
5. Risk avoidance:
Among the various risks associated with the transaction, the transaction places some of the risks on the insurance company. As a result, the work in the business becomes easier and the stability of the business increases.
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