Insurance is a contract between an individual or entity (policyholder) and an insurance company (insurer) in which the policyholder receives financial protection or reimbursement against losses from specific contingencies or perils. The policyholder pays a regular amount of premiums to the insurer, and in return, the insurer pays a predetermined sum assured to the policyholder if an unfortunate event occurs, such as death of the life insured, or damage to the insured or his property. Insurance is a way to manage financial risks, and it helps protect individuals, families, and assets.

Here are some key points to understand about insurance:

• Insurance is a legal agreement between two parties - the insurer and the insured.
• The core components that make up most insurance policies are the premium, deductible, and policy limits.
• There are many types of insurance policies, including life, health, homeowners, and auto insurance.
• Insurance policies will only pay for things that are described in the policy, so its important to read a policy carefully before buying it.
• Insurance helps reduce financial risk by providing financial coverage or reimbursement for losses due to specific contingencies or perils.
• Insurance can offer peace of mind regarding unforeseen financial risks.

In simple words, insurance is a way to protect oneself from financial losses due to unexpected events by paying a regular amount of premiums to an insurance company.