Insurance is a kind of contract that protects you against risk. You pay a sum of money depending on the terms of the policy you choose in exchange for which the company covers for the damages in case of mishap you got yourself insured for.

Eample:
For example a car insurance covers for whatever cost goes into repairing the vehicle if it has been in an accident. Similarly, health insurance covers the cost of medical bills if you suddenly fall sick, helping you to avoid using your savings in such cases.