in Finance by (257k points)
What is definition of Insurance? What are the types of insurance? What is importance of insurance?

Please log in or register to answer this question.

1 Answer

0 votes
by (735k points)
selected by
Best answer

What is definition of Insurance?

Insurance is a legal way to protect against financial loss. It is a form of risk management, primarily used to prevent the risk of potential loss or uncertainty. An entity which provides insurance is known as an insurer, an insurance company, an insurance carrier or an underwriter.

The insurance company promises to cover the financial losses due to guaranteed insurance conditions to recover the premiums paid by the insured person.

What are the types of insurance?

There are many types of insurance available in the market. Here is a list of few popular types of insurance. They are;

1. Life insurance- Life insurance is the insurance on your life. Your dependents are financially secured even after sudden demise.

2. Health insurance- It is bought to cover medical costs for expensive treatments.The premium paid towards a health insurance policy usually covers treatment, hospitalization and medication costs.

3. Car insurance- It is an important policy for every car owner. This protects you from financial loss against any incidents. Some also pay for damages to your car during natural calamities.

4. Education Insurance- This insurance is availed to make children higher education possible without much problems. This insurance pays the education bills, costs and others.

What is importance of insurance?

Buying insurance is important as it ensures that you are financially secure to deal with any type of health problem, which is why insurance is a very important part of financial planning. A general insurance company offers insurance policies to protect life, travel, car and home.
1. Insurance guarantees the financial stability of a family- No matter how much you have saved or your monthly income, an unexpected event can burn deep into your pocket or even jeopardize the financial future of your family. In such case, insurance helps and support the family financially.

2. Insurance brings peace of mind- The premium you pay to the insurance company is the amount that guarantees that the insurance company will pay the damages in the event of an unforeseen event.

3. Insurance reduces stress during difficult times- No matter how hard you try to make your life better, an unexpected turn of events can completely turn your life around, leaving you physically, emotionally, and financially disabled.

Related questions