Insurance

Insurance is a financial arrangement that provides protection against potential future losses or damages. It involves a contract, known as a policy, between an individual or entity (the insured) and an insurance company (the insurer). The insured pays a premium, which is a periodic fee, in exchange for the insurer’s promise to compensate for specified losses or damages, such as those arising from accidents, health issues, property damage, or liability claims.

Insurance operates on the principle of risk pooling, where numerous policyholders contribute to a shared fund. This fund is used to cover the losses experienced by some policyholders within the pool. There are various types of insurance, including life insurance, health insurance, auto insurance, homeowner’s insurance, and business insurance, each catering to different needs and risks.

The primary purpose of insurance is to provide financial security and peace of mind by mitigating the impact of unforeseen events on individuals or businesses. It helps in managing risk and provides a safety net that can facilitate recovery after a loss.