Definition of Insurance - JSS2 Business studies Lesson Note

Insurance is a safety net or protection against unexpected events that could lead to financial loss. When you buy insurance, you're essentially paying a small amount of money (called a premium) to a company. In return, the insurance company promises to help you financially if something bad happens, like an accident, illness, or damage to your property. It works on the principle of pooling risks – many people pay into the system, but only a few will actually need to use it. So, if you're one of the unlucky ones who suffer a loss, the insurance company will help cover your costs, which can save you from significant financial hardship.