Insurance is a contract between an individual and an insurance company, where the individual or entity pays a premium in exchange for protection against specific risks. The insurance company provides financial protection against loss or damage caused by various unexpected events, such as accidents, illnesses, natural disasters, or death.
The purpose of insurance is to provide financial protection against unexpected events that can cause significant financial losses. By paying a premium, the insured transfers the risk of loss to the insurance company. The insurance company, in turn, uses the premiums to pay for the losses of those who have suffered losses covered by their insurance policy.
There are various types of insurance policies, such as life insurance, health insurance, auto insurance, property insurance, and liability insurance. Each type of insurance policy covers specific risks and provides financial protection against those risks.
In summary, insurance is a contract between an individual or entity and an insurance company, where the individual or entity pays a premium to transfer the risk of loss to the insurance company. Insurance provides financial protection against specific risks and helps individuals and entities manage the financial impact of unexpected events.