How does Insurance work?
Human beings are subject to risk at home, at work, on the road, while traveling, in the hospital or anywhere at any time. Insurance is a risk transfer mechanism. Insurance exists to help individuals recover from the financial consequences of unfortunate events by pooling the resources of a large group to pay for the losses of a small group. It exists because risk exists. While insurance cannot remove risks, it transfers all or some of the financial impact of any of such events to the insurer (Insurance Company). It is a practice by which a company provides a guarantee of compensation (claims) for specified loss, damage, illness or death in return for payment of a sum (premium).