What is Insurance?

Insurance is a process which combines the risks of individuals into a group, using funds contributed by members of the group to pay for losses. Insurance is a contract between the insurance company and an individual(insured). The insurance company promises to pay a specified amount to the insured in return for consideration or the premium on the happening of a certain event. Though insurance cannot prevent unwanted event or cause of loss from happening, but it protects the policyholder by compensating him the promised amount of loss.