Insurance is a financial arrangement where an individual pays a premium to an insurer in exchange for financial protection against potential losses or risks.
Insurance helps individuals and businesses manage financial risks by providing compensation in case of unexpected events such as accidents, illness, damage, or death.
The insurer collects premiums from policyholders and pays claims when a covered event occurs. In India, the insurance sector is regulated by the :contentReference[oaicite:0]{index=0}.
Insurance ensures that unexpected events do not create a financial burden, making it a key part of financial planning.
"If a person has health insurance and incurs ₹1 lakh in hospital expenses, the insurer may cover the cost as per policy terms."