Insurance is bought to hedge the risks of the future, which may or may not take place. It is used to hedge against the risk of an uncertain loss. An insurance company, which sells the insurance to insured or policyholder, is called as insurer. The amount charged by insurance company for a certain amount of insurance coverage is called as premium.
Advantages of insurance:
Risk Cover: life is full of uncertainties, so insurance helps your family members to continue to enjoy a good quality of life from unforeseen events and to cover the risk of loss.
Protection from rising health expenses: The cost of health insurance is increasing day by day so at this time, insurance protects the people from diseases and hospital expenses.
Planning for future needs: It also helps as long-term investments. It helps people to meet their future goals like children’s education, marriage, and building home planning and plan for relaxed retired life.
Assured income through annuities: Insurance is one of the instruments for retirement planning. Money saved at the time of earning life and that money will be utilized after retirement.
Disadvantages of insurance may be due to agents, when you work with an agent you have to pay commission to him, this may lead extra cost. If you cut the middlemen then you can save money then it can be paid as premium for insurance.