What is Insurance? Understand the Insurance.

What is insurance?

There are different types of definitions, some of them are below.

“According to law and economics, Insurance is a form of risk management, which mainly used to protect against the risk of a non-essential loss.”

“Basically, Insurance is a protection against an economical loss which can arise on the occurrence of an unfortunate occasion.”

“Insurance provides protection by compensating economic loss that arises from fortuities.”

“Insurance is a ensuring a good result against a possible unnecessary outcome: in company or business and in life, it is a way of managing risk and keeping things on the move.”

“Insurance is an equitable transfer of the risk of a loss, from one to another entity, in exchange for a premium, and can be thought of a surety small loss to avoid a large, probably devastating large loss.”

Everybody knows and understands that an accident will happen, but everyone does not know the time that when it will happen and even if it will happen. In this type of fortuitous events insurance is very helpful to the person, his property and his business.

Insurance is one kind of contract between two parties, one is insurer and the other is insured. Insurer pay fixed amount called premium to the insured on the happening of a certain incident.

Basically insurance is a protection against economical loss arising on the happening of an unpredicted incident. Insurer pays some of money to the insurance company to provide for this protection. In exchange of this premium insurer (a person) can defend himself, his family and his property economically from an unexpected event. And normally for the security of his costly property an owner should ready to pay very small amount.

You can understand easily by this example given below.

One person buys a life insurance Policy for this he has to pay Premium to the insurance company. By this contract the insurance Company promise to the person that in case of any unexpected event like death will happen then a fixed amount will given to his family members.

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Insurance policy

Insurance Premium