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Taking out insurance is one of the most important things you can do to protect yourself and your dependants.
Whether you take out income protection or accident insurance to cover your salary in case you had an accident or sickness and are not able to work or if you take out car insurance in case you crash your car or damage somebody else's car, property or cause injury etc or your on holiday and something goes wrong like you have an accident or get an illness or get robbed. By taking out Insurance in different areas you're getting the peace of mind of knowing that financial help is there when you really need it.
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Insurance is a way to protect you against certain events or risks that could prove very expensive if they were to happen. For example could you afford to replace your car if it was stolen or pay for medical care abroad if you got an illness or had an accident, or rebuild your house after a fire?
When you take out insurance, your insurance company will undertake to pay most of the costs associated with certain risks in return for a specific payment, which is called a premium. The definition of insurance is: a system to protect persons against the risks of financial loss by transferring the risks to a large group who share the financial losses. So basically what insurance means is that a large number of people share the risks and contribute to a central fund, which will only ever be needed to pay out to a small number of them.
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