What is insurance definition, importance & types of insurance policy

All interesting facts about insurance, information, meaning & types

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What is insurance definition, importance & types of insurance policy

There are a lot of people out there who are still confused regarding the definition of insurance and its importance to us. If you are one of such people, here is everything you will need to know.
Definition: What is insurance?
By definition, Insurance is a contract that is agreed between 2 independent parties, one of who is the insurer and whose job is to take a certain amount of money from the other party and pay him during the happening of a certain scenario or event. As you can see, it is nothing but a form of protection against any sort of financial loss due to the unexpected occurrence of a certain event.
The sum of money initially lent out to the insurer is termed as the premium. It is the job of insurance companies to collect premium in order to provide protection in case of such a scenario. Any sort of public loss is paid from this collected premium.

What types of insurance are there
Here are different types of insurances but most of them listed under these two main category and policy.
Life insurance
Perhaps the most well-known form of insurance is the Life insurance. Life insurance policies play the role to protect you and your family. Under this category many subcategories listed as below.

  • Whole life
  • Endowment
  • Term
  • Investment-linked
  • Life annuity plan
  • Medical and health etc

General insurance
General insurance is there to protect the physical material from any sort of damage or loss. This insurance is a sort of protection that you will get from the Insurance Company.

  • Auto insurance
  • Property insurance
  • Personal accident insurance
  • Medical insurance
  • Travel insurance

As you have probably figured out by now, what is Insurance, insurance is simply a safety measurement, the purpose of which is to guard your investments in case you lose them to an unfortunate incident. On many occasions, insurance is made mandatory as well.

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