Insurance is a contract between an individual or entity (the policyholder) and an insurance company. The policyholder pays a premium to the insurance company in exchange for protection against financial losses in the event of an unexpected or unforeseen event, such as an accident, illness, or natural disaster.
The insurance company agrees to provide coverage for the policyholder’s losses, up to a specified amount, in exchange for the premium payment. In other words, insurance is a way of transferring risk from the policyholder to the insurance company, in exchange for a fee.
There are many types of insurance, including life insurance, health insurance, auto insurance, home insurance, and business insurance, among others. Each type of insurance provides protection against specific risks, and the terms and conditions of each policy can vary depending on the type of coverage and the insurance company offering it.