For economic development, investments are necessary. Investments are made out of saving. A life insurance company is a major instrument for the mobilization of saving of the people, particularly from the middle and lower income groups. These savings are channeled into investments for economic growth. The insurance act has strict provisions to insure that insurance funds are invested in safe avenues, like government bonds, companies with record of profits and so on.
The LIC is not an exception. All good life insurance have huge funds, accumulated through the payment of small amounts of premia of individuals .Theses funds are invested in ways that contribute substantially for the economic development of the countries in which they do business. The private Insurer in India are new and have accumulated funds equal to about one-eighth of the L.I.C’s.But even their investment in the various sectors and contributing the directly and indirectly to the country’s economic development, would be of similar proportion.
Role of Insurance in Economic Development
