What is insurance

Business of insurance is related to the protection of economic value of asset. Every asset has a
value, the asset would have been created through the efforts of the owner, it is valuable to the
owner because he expects to get some benefits out of it, and benefit may be in income or some
other form. Like In case of a factory, or an earning member of a family expecting to generate
an income to sustain family. Both are expected to last for a certain period of time, by which the
person expects to arrange for an alternative. An accident or any unfortunate event might make
it incapable of giving the benefits. Insurance is a mechanism which makes sure that economic
value of the asset remains intact.
Insurance is of two parts, endowment and insurance, endowment makes sure that a person has
future money in case he is not able to make money, and insurance makes sure that his family
would get money in case he is not there.
An insurance is a promise between two parties, person makes a promise that I the person
makes a promise that I would continue to give you a specific amount of money (premium) so
that you would either do one or both of these things in case the event insure against happens.
An insurance company on the other hand says that they would keep that promise if you pay
premiums. (There might be different procedures or names for the same things, but essentially
all the insurance is the same.)