The Impact of Insurance on Economic Growthby Bumaco LTD on 07/21/20
By Rose Mlay
Insurance is a contractual agreement where the insurer agrees to compensate the loss or damage sustained to the insured party. The insurers receive premium and the insured receives compensation of loss based on the sum assured. Insurance as a tool for economic growth is handy at managing risks in a cost-effective manner. It does so by managing a pool of funds which is invested within the economy to create ability to compensate the claims that arise.
Insurances as a risk mitigating tool covers a lot of risk aspects such as motor, property, medical, life aspects such as education. These insurance types have great importance in social life because they sustains living standard of people. In addition, insurance helps to provide financial stability in lending organisations. For these reasons we can say that, insurance is shock absorb of the economy.
The key role of insurance in economic growth is based on two fundamental aspects. First, is investment made by insurance companies. Insurance companies collect premium in advance of any claim so insurers can pool the premiums into mid and long-term investment.
Second, insurance influences the interest rates. It provides pool of funds consequently creating a supply of money. In addition, insurance cover reduces risk to financial lenders consequently reducing the interest rate. For instance, consumers and organizations often need to apply for a loan to make a significant purchase or start or expand a business. Before a lending institution will finance a home or a car, or provide backing to entrepreneurs, consumers or organisation, proof of insurance is often required to cover any potential damage (e.g., fire) and assure that loans will be repaid. Lenders can offer a lower interest rate than they could if no insurance were available.
Thus, insurance is an integral part of the economy, performing a variety of important functions. Not only do insurers provide financial security and peace of mind to households and businesses, but they are a vital source of long-term capital, providing stability to financial markets and the overall economy. Without the guarantee of insurance most businesses could not operate as they do today.
Effective Utilisation of Human Resourceby Bumaco LTD on 06/23/20
Life Insurance and Investmentby Bumaco LTD on 06/12/20
By Vicent Kweka
Life insurance is a contract between an insurance policy holder and an insurer, where insurer is supposed to pay sum of money or benefits in exchange for a premium, upon death of an insured person or when policy of insurance matured. Life insurance is the best way to save for future purposes. For instance, you can buy life insurance for the purpose of enhancing your wealth in the future.
There are two fundamental questions for an individual to reflect before purchasing a life insurance. First, an individual must understand why s/he wants a life insurance and second because life is about life an individual should ask himself what if s/he dies how will s/he leave his/her dependents. Further, on the second question an individual should also ask himself what if s/he doesn’t die? Will s/he have enough or secured funding to finance his expenses.
There two main reasons for buying life insurance. First, is protection and second is investment. For the former reason, one buys life insurance to protect his family (dependents) in case of pre-mature death. Related to this, individual can buy life insurance for the purpose of leaving an inheritance, or gift to charity. Thus, life insurance helps to protect beloved ones, institutions or charities from suffering financial hardship in case of unexpected death. For the latter one, life insurance is a form of saving when the policy matures. In addition, life insurance is instrumental for investing in children’s education. Similarly, life insurance is an investment for retirement as well during uncertain times such as when an individual suffers total disability or critical illness.
There are different types of life insurance depending on your lifestyle, family structure, and financial position. In addition, life insurance can be customised to meet your needs. For example, Bumaco Life Insurance offers the following insurance plan which have elements protection and saving. These are endowment plan, anticipated plan, education plan and group endowment. For instance, anticipated plan ranges from 9 years to 25 years. It provides both protection and saving. the policy holder of plan has a chance to benefit three times in a time-covered in the plan. For example, after first three years a policy holder can receive 20% of the benefits. Again, after another period of three years the policy holder can receive another 20% and the rest (60%) can be claimed at the maturity of the policy. Furthermore, the anticipated policy offers the policy holder an option of receiving whole amount in lump sum after maturity of the policy. Similar, to anticipated plan, the endowment plan matures after 10 years or beyond and its benefits are claimed on a lump sum after maturity or upon death.
The challenge with life insurance is that majority think it is only paid when they die and if death doesn't occur, they have lost the premium. This is a misconception. Life insurance is different from general insurance where premium is not recovered when there is no claim. This is the reason why life insurance is also a form of saving. It is saving, because upon maturity of the policy the insured receives the lump sum and its protection because the beneficiaries of the policy receives the sum assured upon death of the policy holder.