Insurance

Insurance is a contract in which an insurer promises specified financial compensation or services in exchange for premiums, subject to stated terms and limits.

Insurance policy: A contract stating an insurance provider’s coverage, exclusions, limits, and obligations. It records the exact risks transferred and conditions under which compensation is due.
Health insurance: Insurance that helps pay for medical care and related health services. It transfers some costs of treatment and care from individuals to insurers.
Self-insurance: A strategy of retaining risk and paying losses from an organization’s or individual’s own resources. It keeps covered losses on the policyholder’s balance sheet instead of transferring them by contract.
Adverse selection: A market problem in which people with higher risks are more likely to seek coverage than those with lower risks. Insurers may face a riskier pool when applicants know more about their exposure than the insurer does.
Premium (insurance): The payment an insured makes to obtain or maintain insurance coverage. Premiums fund expected claims and expenses while reflecting the policy’s assessed risk.
Life insurance: Insurance that pays a designated benefit upon the insured person’s death, or under other specified conditions. It provides financial protection against the economic consequences of a person’s death.
Savings account: A deposit account that holds money for future use and may earn interest. Savings accumulate the owner’s funds, while insurance conditions benefits on specified events and policy terms.
Moral hazard: A change in behavior caused by protection from the consequences of risk. Coverage can reduce incentives to prevent losses or affect how much care policyholders take.
Actuarial science: The application of mathematics and statistics to assess financial risks, especially those involving uncertain future events. Actuaries estimate claim costs and help set premiums and reserves.
Property insurance: Insurance that covers specified damage to or loss of property. It addresses risks such as fire, theft, and other covered damage to belongings or buildings.

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