Insurance is a term in law and economics. It is something people buy to protect themselves from losing money. People who buy insurance pay a "premium" (often paid every month) and promise to be careful (a "duty of care"). In exchange for this, if something bad happens to the person or thing that is insured, the company that sold the insurance will pay money back. An insurance policy is a contract that says what is insured and what the insurer and the insured must do.
Types of insurance[change | change source]
There are many kinds of insurance. With "fire insurance" people get money if their property catches on fire and burns down. "Life insurance" pays somebody else (called the "beneficiary") money if the person who is insured dies or becomes seriously ill. Vehicle insurance pays for damage to a vehicle, and marine insurance pays in case of shipwreck.
Actuaries[change | change source]
Actuaries are the people who figure out how much the premium should be. They balance how much the insurer might have to pay out against the chances of having to pay out. If an actuary thinks that there is a big chance that the company will have to pay out, he will make the premium higher.