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mortgaged property and individual economic

independence.

b) To provide certainty in an uncertain environment

We all know future is totally uncertain. Any misfortune

may occur at any stage of life and to anyone irrespective

of socio economic status. The quantum of loss and time

of losses both are absolutely uncertain. As insurance

provides certainty towards such uncertain losses, the

policy holders pay premium to buy certainty.

c) Distribution of risk

Insurance is a co-operative effort where the risk is

pooled and then distributed among the group of people

who have opted for the concept of insurance. Thus, no

one has to individually bear the losses that may occur

due to uncertainty.

d) Forced savings

Life Insurance is also a method of savings in most

countries (it is India) – of course conditions apply, which

differ from one country to another; it is purchased (and

sold) more as saving and not as risk management. Income

Tax Act gives relief in payment of income tax because

government wants to habituate general public to save

money. It encourages the habit of thrift and savings

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