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Devang Verma

Updated on Jun 4, 2026•finance-and-business

What is Insurance ? Why do people seek for insurance?

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4 Answers
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Michael Jons
Updated on Jun 4, 2026
 

Insurance is a financial protection system that helps people reduce the risk of financial loss during unexpected situations. In simple words, insurance provides support when something bad happens, such as an accident, illness, theft, natural disaster, or death. In exchange for this protection, a person pays a fixed amount of money called a premium to an insurance company.

Insurance works on the principle of risk sharing. Many people pay premiums to the insurance company, and when someone faces a loss, the company provides financial compensation according to the policy terms. This helps individuals and families manage difficult situations without facing huge financial pressure.

There are many types of insurance available today. Some common examples include:

  • Health Insurance – Covers medical and hospital expenses
  • Life Insurance – Provides financial support to family after the policyholder’s death
  • Vehicle Insurance – Protects against accident or vehicle damage
  • Home Insurance – Covers damage to property or house
  • Travel Insurance – Provides protection during travel emergencies

People seek insurance mainly because it provides financial security and peace of mind. Life is uncertain, and unexpected events can happen at any time. Insurance helps reduce the financial burden during emergencies and allows people to recover more easily.

One major reason people buy insurance is for medical protection. Healthcare costs are increasing rapidly, and serious illness or surgery can be very expensive. Health insurance helps people receive proper treatment without worrying too much about money.

Another important reason is family protection. Life insurance ensures that family members remain financially stable if the earning member passes away unexpectedly. It can help cover daily expenses, children’s education, and future financial needs.

Insurance is also important for protecting valuable assets like cars, homes, and businesses. For example, vehicle insurance helps pay for damages caused by accidents, while property insurance protects against fire, theft, or natural disasters.

Businesses also use insurance to protect themselves from financial losses, legal issues, and operational risks. Without insurance, a major loss could seriously affect a company’s stability.

In many countries, some types of insurance are also legally required. For example, vehicle insurance is mandatory in India for all vehicle owners.

Companies like Life Insurance Corporation of India and HDFC Life are among the popular insurance providers in India.

Here’s another fascinating topic you might enjoy: Is health insurance necessary ?
 
 
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Devang Verma
Updated on May 27, 2026
Insurance is not what we do now, it has old and long history. The Chinese traders, traveling via sea would distribute their goods among several vessels, so that the loss from any one vessel being lost , would be partial and shared, and not total.
 
Assets are insured , because they are likely to be destroyed or made non-functional before the expected life time, or maybe through accidental occurrences called perils. Fire, flood , breakdowns earthquakes etc are perils. The risk states that there is a possibility of loss or damage. There should be an uncertainty about the risk. Insurance is relevant only if there is uncertainty. In case of human being the death is certain, but the time if death is uncertain. And insurance doesn’t protect the assets neither it prevents loss due to any peril. Perils can’t be avoided through insurance. Insurance only helps to reduce the ramification of the risk on the owner. Insurance only compensates for losses – and that to not fully.
 
Now, concepts of insurance should be well understood for those who really seek for them. In this fast changing world where fraudulent practices are immense one must be very clear in the terms and conditions of any insurance he selects.
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jhon paul
Answered on Jul 26, 2019
Insurance is nothing but it is an contract between individual and insurance company so it can payout when there is a claim. And the insurance companies mainly work on building products and providing the financial protection from risks.And these risks include death of breed earner life insurance and hospitalized expenses (health insurance),and damage to the assets car insurance.and these insurance policies are used to protect risks of the financial loss for both large or small that may result damage to insured person.so by using this insurance policies there are many benefits so that's why people seek the insurance.
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Avinash Kumar
Answered on Mar 11, 2019
  Insurance is not what we do now, it has old and long history. The Chinese traders, traveling via sea would distribute their goods among several vessels, so that the loss from any one vessel being lost , would be partial and shared, and not total.

   Assets are insured , because they are likely to be destroyed or made non-functional before the expected life time, or maybe through accidental occurrences called perils. Fire, flood , breakdowns earthquakes etc are perils. The risk states that there is a possibility of loss or damage. There should be an uncertainty about the risk. Insurance is relevant only if there is uncertainty. In case of human being the death is certain, but the time if death is uncertain. And insurance doesn’t protect the assets neither it prevents loss due to any peril. Perils can’t be avoided through insurance. Insurance only helps to reduce the ramification of the risk on the owner. Insurance only compensates for losses – and that to not fully.

      Now, concepts of insurance should be well understood for those who really seek for them. In this fast changing world where fraudulent practices are immense one must be very clear in the terms and conditions of any insurance he selects.

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