Insurance is a financial protection arrangement in which you pay a small amount of money (called a premium) to an insurance company so that the company will compensate you if something unfortunate happens in the future.
Simple Definition
Insurance is a risk-management tool that protects you from financial loss due to accidents, illness, damage, theft, death, or other unexpected events.
How Insurance Works
- You buy an insurance policy.
- You pay premiums regularly (monthly, quarterly, or yearly).
- If a covered event happens, you file a claim.
- The insurance company pays you (or pays the service provider) based on the policy terms.
Common Types of Insurance
- Life Insurance – gives financial support to your family after your death.
- Health Insurance – covers medical and hospitalization expenses.
- Motor/Vehicle Insurance – protects against car or bike damage, theft, accidents, and third-party liability.
- Home Insurance – covers damage to your house due to fire, natural disasters, theft, etc.
- Travel Insurance – covers medical emergencies, trip cancellation, lost luggage, etc.
- Business Insurance – protects businesses from risks like fire, liability, and financial loss.
Why Insurance Is Important
- Reduces financial stress
- Provides peace of mind
- Helps manage unexpected risks
- Protects family and assets
- Required legally in some cases (like vehicle insurance)
Leave a Reply