Insurance = Collective bearing of Risk
Insurance is nothing but a system of spreading the risk of one onto the shouldersof many. While it becomes somewhat impossible for a man to bear by himself 100% loss to his own property or interest arising out of an unforeseen contingency,insurance is a method or process which distributes the burden of the loss on anumber of persons within the group formed for this particular purpose.Basic Human trait is to be averse to the idea of risk taking. Insurance, whether lifeor non-life, provides people with a reasonable degree of security and assurancethat they will be protected in the event of a calamity or failure of any sort.Insurance may be described as a social device to reduce or eliminate risk of loss tolife and property. Under the plan of insurance, a large number of people associatethemselves by sharing risks attached to individuals. The risks, which can be insuredagainst, include fire, the perils of sea, death and accidents and burglary. Any risk contingent upon these, may be insured against at a premium commensurate with therisk involved. Thus collective bearing of risk is insurance.
Insurance Indemnifies Assets & Income. Every Asset has a value andgenerates Income to its Owner. There is a normally expected Life-time for the Assetduring which time it is expected to perform. If the Asset gets lost earlier, beingdestroyed or made Non-functional through an Accident or other unfortunate eventthe Owner is Prejudiced. Insurance helps to reduce CONSEQUENCES of suchAdverse Circumstances which are called Risks
Insurance is the science of spreading of the risk . It is the system of spreading the losses of an Individual over a group of Individuals
Insurance is a Method of sharing of financial lossesof a few from acommon fund formed out of Contribution of the many who are equallyexposed to the same loss