Following are the different economics uses of the Life insurance
1: Financial security: Life insurance provides financial security to the family. An untimely and premature death of the bread winner result in a great financial problem to the family. If no security provision is made by the breadwinner to meet such this situation., his death would make the family destitute. They will become a burden to the society. Life insurance is the best instrument to provide security in the event of happening of such contingency.
2) Savings: Life insurance is also a potent instrument for savings.
3) Dreams come true: Every person lives in dream dream of very high education for children very decent marriages to daughters etc. Life insurance makes such dreams come true even if they dreamer is no more.
4) Collateral of Security : Own shelter has become an essential to everyone. Many institutions offer mortgage loans for purchase construction of a house/ flat/ Life insurance acts as a collateral security in respect of the such loans. Without such security the same shelter considered an asset as long as the house purchaser is alive, will become a liability to the family if he dies before repayment of the entire loan. To repay the outstanding loan, the property will have to be disposed off. Circumstances. will make it a distress sale and it will fetch much less than its reasonable market value.
5) Financial Independence: Life insurance provides financial Independence in old age. The lumpsum maturity value of a policy when received can be invested to yield interest sufficient to meet expenses after retirement from work life. Or the same money can be utilised to purchase an annuity. While still young, an individual can purchase a deferred annuity and fund the same in easy instalments.
6) Protects Creditors: Organizations or individual who are in credit business, can ensure for themselves recovery of loan when a debtor dies. The can obtain a group individual life insurance policy on then lives of debtors. So that if a debtor dies, the policy proceeds will repay the outstanding loan.
7) Protects Partnership firm: A Partnership firm can insure the lives of the partners to the extent of capital invested by each in the business. In case of the death of the partner the danger of withdrawal of capital by the legal heirs of the deceased partner can be met from the processed of the policy. Otherwise there is the risk of financial problems for the partnership business.
8) Provides fund for replacement: Under key man insurance an organization can insure the lives of executive whose expertise greatly contributes to their profits. In
case of the death of a key man, the money provided by the insurance can be utilised to recruit a new person who is equally capable as a replacement.
9) Improves productivity: Organization can purchase group life insurance policies as part of the their employee� welfare program. This acts as a morale booster to the workers and result in improved production.
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