Insurance is a form of financial risk management which involves paying the insurance provider on the understanding that if a certain contingency should occur, the insurance provider will pay the insuree a sum of money. Typically the insuree makes regular small payments (called premiums) to the insurance provider on a continuous basis. The amount of these payments will vary depending on the size sum to be paid out in the event of the contingency occurring and on the insurance provider’s calculation of how likely it is that the contingency will, in fact, occur.
Insurance companies grade insurees very carefully, consulting statistics about past payouts, thus identifying characteristics which are associated with higher or lower risk, and setting the insurance premiums accordingly. For example, in the case of vehicle accident insurance, statistics show that young people, particularly young males, are more often involved in accidents than other categories of person. Therefore young men can expect to be charged higher premiums than older men for the same level of insurance.
Insurance is in widespread use. Most households will hold some form of insurance policy. Typical examples of insurance include vehicle accident insurance which, in many countries, is a legal requirement for motorists, home insurance, life insurance and auto insurance or car insurance. Today there are many companies present in the market and thus consumer gets maximum benfit and they can get cheap car insurance, cheap auto insurance, cheap health insurance or cheap life insurance due to competition.