Insurance is a risk management tool that assists individuals who are insured to transfer risk to the insurance company through payment of premiums. The risks that are more likely to lead to purchase of an insurance cover include theft, fire, automobile accidents, health, legal liability and death or disability of employees. However, businesses cannot incur all the risk expenses through insurance thus opt for covers that are critically useful for the business success.
Insurance enables the business to get protection against losses as the insurance company compensates against losses incurred as long as the insured continues paying premium thus, the contract will still be in place. In both life and non-life types of insurance, the insured will always be entitled to the benefit to compensation based on the amount of premiums that is always paid (Strauss, 2008). Example in case of life insurance against health expenses of employees the amount is catered for by an insurance company, likewise, to a nonlife insurance policy example those against fire indicate that in case of fire, the business is covered with the insurance.
However, there exist a difference in terms of benefits of life and nonlife insurance as the life insurance funds cover an individual for a long period against health and other risks on the employee (Strauss, 2008). Life insurance policies of retirement covers are usually reimbursed back to the employee upon retirement or to beneficiaries in case of death, on the other hand, non-life insurances are for a short duration of time on which it is reimbursed within the given time duration.
Without doubt, all businesses need to undertake both life and nonlife insurance policies that give them security against risks. This is because insurance help in the success of a business by reducing uncertainties as the insurance company bears the economic burden of risk such that the managers focus more on running the business without fear of uncertainties. There is no doubt that business should consider insurance as one of its investment priorities.