The meaning of insurance would be an assurance against unforeseen and unfortunate losses. This means that you can be compensated if you encounter a less-than-normal event in your normal course of life and incur a financial loss.
Legally insurance has been defined as a contract where the insurer agrees to compensate the insured against the losses incurred due to any unforeseen contingency. The contract also involves a consideration which is called a premium. The maximum available benefit amount is called the sum assured or the sum insured.
Insurance is a way to manage your risk. When you buy insurance, you purchase protection against unexpected financial losses. The insurance company pays you or someone you choose if something bad happens to you.
You may be responsible for all related costs if you have no insurance and an accident happens. Having the right insurance for your risks can make a big difference in your life.
People get insurance not only to help with risks from unexpected events but also to help pay for routine things, such as annual medical checkups and dental visits. In addition, insurance companies negotiate discounts with healthcare providers, so their customers pay those discounted rates.
An insurance policy is a written contract between the policyholder (the person or company that gets the policy) and the insurer (the insurance company).
The policyholder is not necessarily the insured. An individual or company may get an insurance policy (making them the policyholder) that protects another person or entity (who is the insured). For example, when a company buys life insurance for an employee, the employee is the insured, and the company is the policyholder.