Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingency or uncertain loss. It is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specific loss, damage, illness, or death in return for payment of a specified premium.

Insurance is a mechanism for protecting people against losses, damages, injuries, and costs associated with unforeseen events. Businesses and individuals buy insurance to protect themselves against uncertainties that cause financial as well as personal loss. Insurance is a contract between an insurance company under which you agree to pay for the insurance (called insurance premiums), and the insurance company agrees to pay for losses under certain carefully defined circumstances.

Is Insurance a need or a want?

Insurance is a need. It cannot be a want because, insurance is not a wealth creation tool. It only indemnifies the financial loss incurred due to any damage to an asset or life. Indemnity means, to make good the loss. It strictly does not allow gains or profits. It is a need also because, in the absence of insurance, death of the breadwinner of a family or damage to an asset can have a great financial impact. Insurance becomes need for you and your loved ones in the below circumstances.

1. 1. 1. When you are sole bread winner in the family and do not have much savings
      2. When your employer does not cover you and dependents medically
      3. When you are unable to work, your spouse will have difficulties providing for the next meal
      4. When you are hospitalized, you are unable to pay for even the deductibles or co-insurance 
      5. When your children are young and studying but you do not have enough savings for their education and your spouse is not able to fund their education with his/her income.