Oxford Dictionary Meaning for Insurance:
"Contract to provide compensation for loss, damage or death."
Insurance means transfer of risk from the policy owner to the insurance company for a possible loss.
Risk is nothing but the probability or chance of an uncertain event causing a loss.
The principle of "Prevention is better than cure" is used. We cannot stop the possible uncertain event form occurring but we can insure ourselves from the loss happening to minimize the risk.
Insurance can be purchased only against financial losses.
In other words, insurance is a legal contract binding the policy owner and the insurance company where upon the insurance company agrees to pay a pre-defined amount as compensation towards loss to policy owner or its nominee.
Life is too precious to be lost and we need to protect it.
The terms Insurance and Assurance are different.
Don't get confused.
Insurance refers to purchasing cover against any possible occurance of an uncertain event while assurance is a provision for a certain event.
