What is Insurance?
Insurance is a legal contract between two parties- the insurance company (insurer) and the individual (insured), wherein the insurance company promises to compensate for financial losses due to insured contingencies in return for the premiums paid by the insured individual. In simple words, insurance is a risk transfer mechanism, where you transfer your risk to the insurance company and get the cover for financial loss that you may face due to unforeseen events. And the amount that you pay for this arrangement is called premium. There is insurance available for various risks, starting from your life to mobile phones that you use. In the end, it’s essential to protect what is ‘important’ to you.
Forms Of Insurance
There are many forms of insurance existing (Like eight of them) but the most common ones are Health insurance, Car insurance or Automobile Insurance, Life insurance, Home insurance, Travel insurance.
-Health insurance: Health insurance is a contract between a health insurer and a policy holder that requires the health insurer to pay for all or at least a portion of medical costs.
-Car insurance or Automobile Insurance: Auto insurance covers cars, motorcycles, trucks, and other vehicles, and is intended to protect against physical damage or bodily injury that could result from driving, whether the incident is reckless or an accident.
-Life insurance: In the event of death, a life insurance policy pays a beneficiary an agreed-upon amount of money to cover the expenses left by the deceased. A beneficiary is the person or entity named in a policy who receives benefits, such as a spouse.
-Home insurance: Homeowners insurance covers the house you reside in and any associated structures, such as a porch, garage, and balcony.
-Travel insurance: Travel insurance covers trip cancellations, lost or misplaced luggage, travel accidents, and even medical expenses while on the trip.