What is Insurance?
Insurance is a financial arrangement that allows individuals or businesses to protect themselves against potential losses. By paying a premium, policyholders receive coverage for various risks, helping to provide peace of mind in uncertain situations.
The Purpose of Insurance
The main purpose of insurance is to mitigate the impact of unexpected events, such as accidents, illnesses, or natural disasters. By spreading the risk across a larger pool of policyholders, insurers can help cover the costs associated with these events, ensuring that individuals and businesses can recover from financial setbacks.
Types of Insurance
There are numerous types of insurance available, tailored to different needs. Common examples include health insurance, which covers medical expenses, auto insurance, which protects against vehicle-related accidents, and homeowners insurance, which safeguards property against damage or theft. Each type serves a specific purpose, helping policyholders manage their unique risks effectively.