PE insurance policy is the emergence of an insurance firm. Its main aim is to insure people from certain risk that may occur leading to loss or damage. An insurance company has a great impact on the insured. It helps them maintain a high living standard even after risk has occurred. Some of the advantages of PE insurance are;
PROS:
1. Provides economic protection: Insurance provides economic and financial protections to the insured against the unexpected losses.
2. Shares risks: Insurance is a cooperative system which helps to share risk among the insured. Thus, the insurance company reduces the risk of the insured in exchange for a small premium.
3. Maintains a high standard of living: Insurance provides financial protection against an unexpected risk or losses. This ensures people are able to maintain a high standard of living.
4. Creates employment opportunities: Since insurance has become business in the modern-day, it has provided employment to thousands of people. This may lead people to live a good life and also helps to eradicate poverty.
5. Promotes foreign trade: The growth of the international trade of the country has greatly helped by shifting risk to the insurance company. Exporters may devote their full attention to the promotion of business.
6. Helps to promote business smoothly: A business gets financial compensation in case of loss or damage to the properties of the business through insurance. This encourages people to establish their business as they are encouraged to do so and when they take pe insurance.
7. Helps in economy development: Insurance companies collect premium through life or non-life policies. This premium amount is invested in various development areas like trade. This enhances high economic growth.
8. Offers loan: The pe insurance company offers loan opportunity to the insured. The insured can also get a loan from other financial institution through the calculated premium.
9. It manages cash flow uncertainty: The pe insurance provides payment for covered losses when they occur. Therefore, it significantly reduces the uncertainty of paying losses out of your pockets.
10. Protects liabilities: This insurance company protects against many risks and therefore, clients are compensated when a risk or loss arises.
Some of the disadvantages of PE insurance are;
CONS:
1. It does not give full compensation: PE insurance does not give compensation to all losses. The insurance company may fail to insure the business making it financially unstable after the risk.
2. It is time-consuming: The PE insurance takes a long time to provide financial compensation because of lengthy legal formalities. The procedure of compensation is too long and tiresome which can cause the insured to give up.
3. It does not offer all the facilities: Although PE insurance encourages savings, it does not provide all services covered in the policy. Mostly, the insurance company does not offer small rates within a period of time.
4. It may lead to crime in society: The beneficiaries of the policy may be attacked by robbers. This may discourage people from insuring as they will feel insecure.
5. High premium rate: Sometimes, the total amount of premium might be higher than the policy amount receivable on maturity. This can be a loss to the insured and therefore this will discourage many people from insuring.
6. It always tries to compensate less: The pe insurance always tries to give very less compensation as possible in order to maximize their profits. This makes people fail to insure with the company as they are afraid the company may fail to compensate them.
7. It adds expenses: In most cases, pet insurance is expensive, depending on the risk you insured. This may make one fail taking up the insurance policy as they are not financially stable to pay for the cover. This will make it not a suitable insurance cover.
8. It is taxable: The indemnity payment through attaining of agreement proceeds from the insurance policy is taxable. This makes the insured person pay more than the amount they will likely receive during compensation hence a loss to them.
9. It is very costly: The pe insurance coverage is very expensive. Therefore, it may limit people who are from low earning level from insuring with them. As a result, they will be unable to raise the amount required to pay in order to insure against certain risk.
10. One needs professional business inventor: For a client to be insured with the insurance company, he or she may need an insurance professional. Therefore, he/she should have general knowledge about the insurance firm so as to provide information and ideas about insurance coverage. Sometimes it is very difficult to get an adviser and also time-consuming to follow all the steps required.
