What is Insurance?

Insurance is a financial arrangement that provides protection against specified risks in exchange for payment, known as a premium. Insurance is a deal you make with an insurance firm. You pay them some money every so often, called a premium. In return, they promise to help you out if something bad happens, like a car crash or getting sick. For example, if you crash your car and you have car insurance, they’ll pay to fix it. If you’re sick and have health insurance, they’ll cover your medical bills. The idea is to share the risk with the insurance company, so if something bad happens, you’re not stuck with all the costs by yourself. Paying premiums regularly means you’re covered for different problems, giving you peace of mind and making sure you’re not left in a financial mess if things go wrong.

Key Features of Insurance:

• Protection from Problems: Insurance shields you from unexpected events like accidents or illnesses. When you pay your premiums, the insurance company promises to help you out if something bad happens.
• Premiums: To keep your insurance, you pay money regularly, usually monthly or yearly. This is called a premium. How much you pay depends on things like what you’re insuring and how risky it is.
• What’s Covered and What’s Not: Your insurance policy lists what it protects you from and what it doesn’t. It’s important to read it carefully to know exactly what you’re covered for.
• Getting Paid: If something bad happens and you need help, you file a claim with your insurance company. They’ll check if your claim is valid, and if it is, they’ll give you money to cover the costs. This process needs to be smooth and quick so you can get the help you need when you need it.

Insurance and assurance are financial products that protect against risks and certain events. Insurance covers things that might happen, like accidents, while assurance covers things that are sure to happen, like any certain event. They help people feel secure about their finances and plan for the future. Understanding the difference between them is important for making smart financial decisions.