What is the primary goal of insurance?

The primary goal of insurance is to provide financial protection against losses or damages. This fundamental principle of insurance is based on the concept of risk management. Individuals or businesses pay premiums to an insurance company, which in return agrees to cover specific losses that may occur in the future, such as damage to property, health care costs, or liability for injury to others.

By spreading the risks among many policyholders, insurance helps individuals and businesses manage the financial impact of unexpected events. This protection can significantly reduce the financial burden that unexpected events can create, allowing individuals and organizations to recover and maintain stability. The overarching purpose of insurance is to safeguard against risks that could otherwise result in severe financial consequences, fostering a sense of security and peace of mind for policyholders.