Insurance is a contract or an agreement between two parties, the insurer (insurance company) and the insured (policyholder), where the insurer agrees to provide financial compensation to the insured in the event of loss or damage to the insured person or property in exchange for a premium payment. Insurance is a means of transferring risk from the insured to the insurer, where the insured pays a small premium to the insurer in order to protect themselves from the potential losses that they might incur in the future.
Insurance can be seen as a form of risk management, where individuals or businesses purchase insurance policies to protect themselves from uncertain events that may cause financial loss. Insurance policies are typically written contracts, which specify the terms and conditions of the coverage being offered, the premium that needs to be paid, and the circumstances under which the policy will pay out.
There are different types of insurance policies available in the market, such as life insurance, health insurance, property insurance, automobile insurance, travel insurance, and many others. Each type of insurance policy covers a specific risk and provides financial protection to the insured against potential losses related to that risk.