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What is Insurance?
Insurance is a contract between an individual or organization and an insurer in which the insurer agrees to provide financial protection or reimbursement against potential losses in exchange for a premium. Insurance policies are used to protect individuals and businesses from financial loss due to unforeseen events such as accidents, natural disasters, and illness.
There are different types of insurance policies available, each designed to cover specific types of risks. Some common types of insurance include:
Insurance companies use actuaries to set the premium to be charged to the policyholder, by assessing the risk and determining the likelihood of a claim being made.
The main function of insurance is to transfer the risk of a loss from the policyholder to the insurer, and to provide financial protection in the event that a loss occurs. Insurance policies can also help individuals and businesses manage the financial impact of unexpected events and plan for the future.