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Insurance as a security tool - Meaning - Essay
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Insurance as a security tool – Meaning – Essay

Now a day’s social security is considered as a big measure to reduce poverty unemployment and disease. Social insurance is a technique of social security and includes all section of the society. Insurance is considered as a security tool for companies, organizations and individuals.

Due to development, the joint family system is reduced to tiny family system where it consists of mother, father and children. If the earner of the family dies the family income also dies. The economic condition of the family is affected and unless some arrangements are available, the family is pushed to lower strata of society. The insurance comes in handy to restore the situation to some extent. In this sense, the insurance business is complementary to the government’s efforts in social management. Insurance which was evolved as an instrument for social improvement is being now viewed as a social security tool by various stakeholders.

In socialist system, social security is the government’s responsibility. But in capitalistic system of society, provision of security is left to individuals. The society provides instruments and insurance is one of the instruments. In India the provision of social security was a responsibility O the State, as per the Schedule 7 of the Constitution of India. The laws passed by the State to serve the purpose included the use of insurance- compulsory or voluntary as a security tool. The Employees State Insurance was one such scheme, which took care of the expenses incurred due to sickness, disablement, maternity and death, for the benefit of industrial employees and their families. Insurers played an important role in the social security schemes sponsored by the GOI. The Insurance Act, 1938, made it mandatory for insurance companies to offer a percentage of business to the people in the rural sector. They had to offer insurance to workers in the unorganized sectors, economically backward classes of the society and other categories listed by the IRDA. All the insurance schemes operated on commercial basis are designed to provide security to the rural families.

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