What is Insurance? definition and meaning A promise of compensation for specificpotentialfuturelosses inexchangefor aperiodicpayment. Insurance is designed toprotectthefinancialwell-being of an individual,companyor otherentityin the case of unexpectedloss. Someformsof insurance are required by law, while others areoptional. Agreeing to thetermsof aninsurance policycreates acontractbetween theinsuredand theinsurer. In exchange forpaymentsfrom the insured (calledpremiums), the insureragreesto pay thepolicyholdera sum ofmoneyupon the occurrence of a specific event.In most cases, the policy holderpayspart of the loss (called thedeductible), and the insurer pays the rest. Examplesincludecar insurance,health insurance,disability insurance,life insurance, andbusiness insurance.
“ My car insurance premium increased because of the accident that happened at an intersection on the other side of town last month. ”
“ Our company takes pride in providing our employees with a wide variety of wonderful and affordable insurance policies to ensure they are taken care of in their times of need. ”
“ After my company lost its entire factory when the building burned down, we were able to build a new building and keep the company going because we received a large insurance payment. ”