What is Insurance?

Insurance is a contract. Before proceeding to the actual meaning of insurance, we will try to understand the basic entities involved. Here the few:

• Payee: A person who opts for an insurance. He is the one who is responsible for the payment of premiums.
• Contract: An agreement into which the payee and the provider enter into.
• Provider: Generally a well known organisation the field of insurance or banks (Banks now-a-days have an insurance wing attached to it)
• The event: The occurrence of some incident against which the insurance is opted for.

So knowing the above terms it is now interesting to know what actually and insurance is. It is contract or an agreement into which the payee and the provider enter into, where in the provider promises to pay a certain amount to the payee upon the occurrence of an event against which the insurance is opted for. The agreement will consist of several terms and conditions which are agreed upon by both the payee and the provider.

Insurance can be bought for almost anything. Below are some of the well known forms of insurance in our present day life.

1. Auto Insurance
2. House Insurance
3. Life insurance
4. Travel insurance

Auto Insurance is one thing that is taken for automobiles like cars, trucks, two-wheelers and other modes of road transport. This kind of insurance is taken in view of protection against loss that incur due to accidents. Similarly life insurance provides protection to the family members in case of any eventuality that occurs to the person who is insured.