This archive report was first published on 6 October 2019.
On October 6, 2019, insurance was defined as an agreement between an insurance company and an individual, where the insurance company promises to make good the losses of the individual in case of an emergency or accident.
The insured individual typically pays a premium in return for the promise made by the insurance company, which takes the risk of providing a high cover for a small premium because very few insured people actually end up claiming the insurance.
There are several types of insurance, including life insurance, health insurance, education insurance, and car insurance, each catering to specific needs and risks.
Life insurance ensures that one's dependants are financially secured in the event of the breadwinner's untimely demise, while health insurance caters for treatment, hospitalization, and medical costs in case of illness.
Education insurance provides funding for a child's educational expenses, and car insurance cautions the owner of the vehicle from meeting expenses in case of an accident or theft.
Benefits of insurance include improving an individual's credit score, payment of losses by indemnifying individuals and organizations for covered losses, and reducing the burden of uncompensated accident victims.
Insurance also enables efficient use of an insured individual's resources by setting aside a large amount of money to pay for the financial consequences of the risk exposures that can be insured.
