What is Insurance?
Modern Period can be termed as the period of risk. In this period the life and property of a human being are surrounded by the risk of devastation, disability, disease and death. These risks appear as the cause of financial loss. Insurance is a way to transfer such risks to an insurance company. It means insurance is a risk transfer mechanism. It is the most effective risk management tool. In short, it is a means of protection from financial loss.
The insurance is a legal agreement between two parties. The first party is known as the insurer. The insurer is a company or the insurance career or the underwriter. It is called the provider. The second party is known as the insured. The insured is an individual or an entity that is known as policyholder. The agreement between these two parties is known as insurance coverage or insurance policy. The amount that an individual or entity pays is known as premium. Under such agreement the insurer provides financial coverage to the ensured for the specified loss, damage, illness, disability and death in return for a specified premium.