What is Insurance - Tutorial
Definition of Insurance
Defining insurance is a very easy thing to do.
Insurance is when you ask an insurance company to take on a certain risk and the company agrees to do
so if you pay a premium for the the risk.
Here's how it works. Let's say you want to purchase insurance for your house. What you do is call an
insurance company that sells homeowners insurance.
Ask for an agent that specializes in homeowners
insurance because not all agents hold the same
kind of insurance license.
Tell the agent that you are interested in purchasing
homeowners insurance.
The agent will then ask you a few questions and
will give you a quote as to how much the premium
will be and what the insurance will cover.
So when something happens to your house such as
a fire or someone breaks into you house, the
insurance that you purchase will pay you for the loss.
So again, insurance is when you pay a premium to
an insurance company to cover you in case you
experience an unexpected event such as illness, death, accidents, thefts, fires and many other things.
What is happening is you will be paying the insurance company a premium to transfer the risk of the above things to them.
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