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Diverts States Resources for Other Purpose
One important responsibility of the governments in any country is to take care of the old and dependent population. Many developed countries like U.S. and Canada collect a large amount of funds from the employed citizens to meet these needs. The state also allocates few funds for this purpose. With the increasing awareness of insurance the governments can be assured of spending less for the old. Though this will not absolve their responsibility it will help to reduce the quantum of their investment. As a result they can concentrate on burning issues and problems in the society.
Life insurance companies collect premiums from multiple investors. They are thus able to mobilize large funds. This money is used to finance trade and development activities. Ultimately production of goods and services will flourish and the economy of the nation will be improved.
The policy holders are entitled to claim income tax exemptions for paying the premiums. The amount and the extent to which they are allowed depends on other factors like the persons income and if the insurer is a private player or run by the state. This provision will indirectly tempt people to invest in insurance and attain a mutual benefit of tax exemption and providing security as well.
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