What is insurance?

 What is insurance?  

What is insurance?  Technically, it is a form of risk management in which the insured entity transfers the cost of potential loss to another entity in exchange for a small financial return.  This compensation is called as premium.  In simple terms, it is like paying a lump sum to an entity to protect yourself from future potential losses.  

Thus, when there is a case of misfortune, the insurer helps you to get through the situation.  Why do we need insurance?  Everyone has this question in mind.  Do I really need security?  Life is full of surprises, some good people, some bad people.  You just have to be more discriminating with the help you render toward other people.  It helps you in that sense of security and peace. 

 There can be many reasons where you may need help, such as a serious illness, a natural disaster, the unexpected death of a loved one, and so on.  Adequate insurance in such situations provides a significant helping hand in your financial situation.  Thus, one should choose the right type of defense according to their needs.

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