What is Insurance?
A contract, referred to as a policy where an insured pays a sum of money referred to as a premium, to an insurer, who in return agrees to pay for loss the insured suffers in defined circumstances.
Insurance is a protection against financial loss arising on the happening of an unexpected event/accidents. Insurer collect premiums to provide for this protection from various people. The trick is not everybody is in problem all the time. A loss is paid out of the premiums collected.
For Example, in a Life Policy, by paying a premium to the Insurer, the family of the insured person receives a fixed compensation on the death of the insured or at the completion of the policy at said terms.
Similarly, in a car insurance, in the event of the car accident, the insured receives the compensation to the extent of damage or the actual value of the vehicle insured.
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