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.