What is insurance?

Insurance is a contract that transfers the financial risk of a covered loss from a person or business to an insurance company in exchange for a premium. Common types include life insurance, which pays a benefit to beneficiaries when the insured person dies and may include annuity payments; health insurance; and property and casualty insurance, which covers loss or damage to property such as a home or car and legal liability for injuries or damage to others. Policies are sold by state-licensed agents, known as producers.