Functions Of Insurance.
                     FUNCTIONS OF 
INSURANCE
What is Insurance?
• An insurance policy/plan is a legal contract between two parties, the insurance-company (insurer) 
and the individual (insured). 
• Under the contract, you regularly pay money to the insurer in the form of premiums (which can be 
scheduled as EMI for auto deduction from your bank account), and they pay you back as an 
assured amount in an unfortunate situation. 
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Basic Functions Of Insurance
• The basic functions of insurances are divided into three categories. These categories are as 
follows:
– Primary Functions 
– Secondary Functions 
– Other Functions
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PRIMARY 
FUNCTIONS OF 
INSURANCE 
Provide safety and security
• Insurance provides financial support and reduces uncertainties in business and human life. It 
provides safety and security against special incidents. 
• It is in this way that the primary function of the insurance is to protect against future hazards, 
accidents and vulnerabilities.
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Collective Risks
• Less number of individuals acquire insurance-policy to safeguard from disaster. Be that as it may, 
not every one of them is constantly exposed to bad luck. 
• In simple terms, the few individuals contribute to insurance and just a few individuals need to 
spread it.
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Risk Assessment
• Insurance-organizations determine what the amount of risk is by surveying the various 
components that climb to give a chance. 
• The premium rate settlement process is also based on the risks involved in the policy.
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Certainty
• As we obtain coverage from the insurer, we are secure about our ability to meet future losses 
with coverage and withstand future threats. In any case, when we get security, it turns our 
vulnerability into assurance that we can deal with future threats.
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SECONDARY 
FUNCTIONS OF 
INSURANCE 
Forestalling Losses
• Insurance cautions people and business people to understand the appropriate gadget for 
shocking forecast of hazards by following safety guidelines; A programmer helps establish a 
sparkler or alert framework, and similar damage.
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Covering bigger risks 
with smaller capital
• Insurance melts the specialists of security ventures. You can pay a small premium against big 
threats and suspicions to eliminate it.
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Helps in the 
development of Greater 
Industry
• In setting up large industries, there is great potential for hazards. Large enterprises have 
extended areas of functioning where one sector has no connection with another sector of the 
same industry now and then. 
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