ADVANTAGES OF INSURANCE

                      What is Insurance?

Insurance is a contract to compensate the insured if certain specific events take place against specific payment of consideration. It is a coverage of risk on payment to the insurer. It can also be called a form of cooperation whereby one group compensates the other group or individual against consideration on the happening of a specific event.

1. Provides Security

Provides Security: 

Insurance gives security to both individuals and businessmen. There are many risk which are covered by parchasing insurance. For example, the building of a factory which is insured suddenly catches fire. The insurance company will idemnify for the actual loss or damage to property caused by fire. The financial loss of the policy-holder is thus offset in full or in part by the insurance company. The insurance company will pay the full amount of the loss of goods to the trader. Insurance thus provides safety against economic difficulties to the families and businessmen.

2. Optimum Allocation of Resources

Optimum Allocation of Resources: 

There are some enterprises which involve risks of fire, loss of goods in trainsit and are open to burglary, robbery, theft etc. If the businessmen are not able to buy the fire insurance or marine insurance or theft insurance, the resources of the country will not be invested to these enterprises which are exposed to risk. The insurance companies by giving coverage to the risky enterprises divert the resources to the risky business and creat competition among the producers. Thus diverting the resources to risky business, brings about the optimum, use of the scarce resources to the country.

3. Loss Prevention Activities

Loss Prevention Activities:

The insurance companies spend large sums of money every year to make the policy safety minded. They spend the money on medical research, health services, finding out causes of fire, theft, road accidents etc, and make the public aware through advertising as to how changes of losses can be minimized or eliminated. The insurance companies thus render a great service to the community by decreasing the chances of losses through loss prevention activities.

4. Provides Basis for Credit

Provides Basis for Credit: 

The businessmen pledge the inventories or th building for getting loan from commercial banks. If the building or the stock is insured, they can easily get loan from the banks, The insurance coverage, thus provides a good basis for credit to the business community.

5. Source of Capital Formation

Source of Capital Formation:

The insurance companies pool larg sums of money through premiums. They invest the capital in purchasing shares and debentures of financially sound companies. The capital of the insurance companies is thus utilized for the development of productive enterprises in the country.

6. Stabilizer of Organization

Stabilizer of Organization:

The insurance companies help in creating good will between the employers and the employees by providing group insurance to all the permanent employees of the company. They also introduce retirement income plans which ensures a regular income to the employees after their retirement. The monetary benefits given by the insurance companies to the employees of an organization greatly help in stabilization the organization.

6. Stabilizer of Organization

Stabilizer of Organization: 
The insurance companies help in creating good will between the employers and the employees by providing group insurance to all the permanent employees of the company. They also introduce retirement income plans which ensures a regular income to the employees after their retirement. The monetary benefits given by the insurance companies to the employees of an organization greatly help in stabilization the organization.

7. Covers Unforeseen Accidents

Covers Unforeseen Accidents: 

The insurance companies give proper coverage to the injury causing disability to the employee or the death of an employee on work oa a small periodic premium by the owner of the factory. The firm has not to bear the expenses of unforeseen accidents. The income of the firm, thus, remains stabilized through the insurance.

8. Spread of Risk

Spread of Risk:  

A large number of persons get marine, fire, life insurance policies and pay premiums to the insurance companies. whenever a loss occurs, it is compensated out of the funds of the insurers. The loss is spread among a larg number of policy holders. The insurance companies collect larg funds by way of premim. These funds are invested in government securities. The government thus gets sufficient loans easily for development purposes.

CONCEPT OF BUSINESS

In its literary sense, the term business means the state of being busy. Technically, the term Business is defined as all the commercial and industrial activities that provide goods and services to the people and are undertaken for profit. For example, a manufacturer who converts raw material into simi finished or finished goods (cotton to yarn to cloth).

A person who is engaged is fishing, poultry , mining with the sle objective to earn profit are carrying on the business activities. Similarly, all commercial occupations which deal with the buying and selling of goods on retail or wholesale basis, the financing of trad by banks, the transportation of goods from places where there are in less dmand to the places where they are more demanded for earning of profit are doing business. Thus business combines human, material, technological and financial resources carried on for profit.

ACTIVITIES EXCLUDED FROM BUSINESS

1) Social Service Activities:

There are certain human activities which do not seek profit. They are organized and operated with the sole object of rendering social dserviceto the society. For example, setting of free hospitals, free educational institutions, provision of freelgal services etc. Are provided by certain organizations purely for social benefits to the society. These and such other non-profit activities which are undertaken for the purpose other than of earning money or profit are excluded from the study of business.

2) Personal Consumption Activities

Personal Consumption Activities:

Similarly, all the activities which are concerned with the production or purchase of goods and services for personal consumption fall outside the scope of business. For instance, shoemaker making a pair of shoes for personal consumption or a tailor sewing shirts for his own use or a nurse nursing her own child are notbusiness activities because these do not involve in sale or transfer for value. However, if a shoemaker manufactures shoes for regular sale in  the market with a view to earn profit, it will be purely a business activity.

3) Illegal Activities

Illegal Activities:

The economic activities to be included in business must be legal. If a person earns money through smuggling or sale of heroine, or adulteration of goods etc. These activities being illegal and anti-social are excluded from the study of business.

DEFINITIONS AND CHARACTERISTICS OF BUSINESS

The term "Business has been defined differently by various writers. According to Urwick and Hunt, "Business is any enterprise which makes, distributes or provides any service which other members of the community need and are within to pay for it".

In the words of Davis, Business may be defined as an activity in which different persons exchange something of value whether goods or services for mutual gain or profit". Ronald defines business as "as an organization that produces or goods sells and services to make profit". Business thus is the sum of total activities which are connected with the production or perchase and sale of goods and services with the object to earn profit (profit is the difference between a business's revenues and its expenses). The persons who are engaged is business are named as business or entrepreneurs. An organization formed for carrying on business activities is called business organization.

CHARACTERISTICS OF BUSINESS:

      The Essential Characteristics or Features Of Business Are As Under:
1) Entrepreneur:

An entrepreneur is a person who combines the factors of production to produce goods and services for profit. The presence of an entrepreneur is essential in any business which may be operated on a small or on a large scale.

2) Deals in Goods And Services

Deals in Goods And Services:

Every business enterprise whether it is carried on a small or a large scale deals in goods and services. The goods may be consumer goods such as bread, butter, cloth, shoes, pens etc, or capital goods like plant, machinery, building, etc, or  it may take the shape of services like transportation , electricity, banking, insurance, advertising etc.

3) Involves Production or Exchange of Goods

Involves Production or Exchange of Goods: 

An important characteristic of business is that it involves production or sale of goods and services for earning of money. Any activity undertaken for personal consumption or for free distribution fall outside the scope of business. Business includes only economic activities.

4) Series of Deals

Series of Deals: 

Business consists of producing or purchasing and selling of goods on continous and regular basis. One or two stray or isolated transactions are not treated as business. A student, for instance, sells his old books in the market is not doing business. However, if he purchase old books and sells them is spare time on regular basis to earn profit, it will then be treated as business.

5) Desire to Earn Profi

Desire to Earn Profit: 

The primary aim of business is to earn profit. if an enterprise is to survive, grow and expand, it must yield profit. Profit making thus is an essential element of business.

6) Creation of Utilities

Creation of Utilities: An important characteristic of business is the creation of utilities is goods so that consumers may use them.

For instance, when goods are transported from the places of production to the places of consumers who ultimately use them, then place utility is created. When raw material is converted into finished goods, it creats form utility. When it is stored and brought into the market when needed, then time utility is created.

IMPORTANT OF BUSINESS IN THE PRESENT DAY WORLD

IMPORTANT OF BUSINESS IN THE PRESENT DAY WORLD:
Importance of Business: In earnly time, the goods were produced for one's own self or for the use of family members at the most. As time passed on, the business was conducted by means of barter system in which goods of one kind were exchanged for other goods of equal value. When coins cam into use, business expanded both in rural and urban areas. With the increase of transport facilities, the important and export of goods developed between the nation. The industrial Revolution of the 18th century increased the scale of production, division of labour, specialization and standardizaion of goods. Over the years, the size of business has expanded. The ise of machines has increased. The working business is being computerized ar a very fast speed now. The important of business can be judged from the various activities connected with it.

               IMPORTANT OF BUSINESS

 Mass Production of Goods:
1) The business of today is making the best possible use of the scarce resources for production goods on a larger scale. The us of automatic machines, new materials, new processing methods etc have not only lowered the cost of production of goods but has helped the producers in producing goods in desired quality and quantity. 
Expansion of Market:
2) In the modern world, goods are produced by business according to the needs and expectations of the customers. The customers want goods and services of requisite quality, atreasonable price in at right time. The business of today tries to satisfy the costumers both within and outside the country by developing and designing the products according to the tastes and purchasing power of the costumers. Markets, therefore, have expanded consumption of goods due to increase in number of customers all over the world.