Insurance investment is of great significance to the long-term healthy and stable development of the insurance industry, the management of insurance companies and the socio-economic operation. There is possibility and space for the use of insurance funds, and rational use is both necessary and urgent. First of all, investment in insurance funds can promote the healthy development of the capital market. (1) Investment in insurance funds has increased the sources of funds in the capital market. Insurance funds are an important source of funds in developed capital markets. Compared with property insurance companies, life insurance companies provide a long-term stable source of funds for the capital market because of their long-term stable business. For example, in the United States, where the capital market is the most developed, insurance companies are the most important holders of the US securities market. The entry of insurance funds into the market can stimulate and meet the investment needs of capital market entities, improve the capital market structure, improve the liquidity of capital, stimulate the maturity of capital market entities and improve economic benefits, and promote the coordinated development of insurance market and capital market. (2) The safety requirements of insurance fund investment expand the financial instruments in the capital market. The use of insurance funds conforms to the principles of safety, profitability and liquidity, in which profitability is the goal and safety and liquidity are the basis. Because insurance funds are always responsible for compensating disaster losses and paying insurance money, insurance companies must take corresponding measures to deal with risks. Therefore, insurance companies have a strong demand for hedging tools such as stock index futures and options during the investment of insurance funds, which is an important factor to stabilize the capital market. Moreover, the market dominated by institutional investors advocates long-term investment and strategic investment. Therefore, investment in insurance funds can promote the healthy development of China's capital market.

Secondly, investment in insurance funds can promote the long-term development of insurance industry in China. (1) Investment in insurance funds has enhanced the solvency of insurance companies. Adequate solvency is the most basic requirement for insurance companies. With the increase of insurance companies in China, especially the entry of foreign insurance companies, the competition in the insurance industry is becoming increasingly fierce, the premium is reduced, the operating cost is greatly increased, and the underwriting profit is obviously reduced. At present, China's insurance funds are mostly long-term funds, especially life insurance funds, some of which are as long as 30 to 40 years. In such a long time, if most of the funds are in the bank, the insurance business may achieve balance of payments through the preservation and appreciation of bank interest. For example, due to the continuous decline of interest rates in China in the past decade, many companies have suffered losses in their original businesses, so how to make good use of insurance funds to enhance the solvency of enterprises is a problem faced by insurance companies. According to the statistics of the Capital Utilization Supervision Department of the China Insurance Regulatory Commission, in 2005, the average rate of return of direct investment of insurance funds in the stock market was higher than 6%, and the best result of direct investment in stocks by a single insurance company was as high as 20%. At present, the solvency of insurance companies in China is still very low compared with the international insurance industry. Therefore, the entry of insurance funds into the market is conducive to insurance companies to expand new business, improve investment income and enhance solvency. (2) Investment in insurance funds has enhanced the risk control ability of insurance companies. Insurance fund is a special fund, which is specially used to deal with the adverse consequences that natural disasters and accidents may bring to production and life. Therefore, the premium income of an insurance company is a liability to the insured, not the actual income of the insurance company. Because of the continuity and uncertainty of insurance liability, it is possible to bear the unexpired liability of various insurance businesses at any time. Therefore, when using funds, insurance companies should fully implement asset-liability management, make reasonable investment in insurance assets, match assets and liabilities, and enhance insurance companies' ability to resist risks. In addition, the income from insurance investment makes it possible for the company to reduce the premium, which will help to improve the depth of insurance, stimulate the potential demand of the market, increase the premium income, improve the operating environment of the insurance industry, enhance the competitiveness of insurance companies, and make the insurance industry enter a benign development state.