1. Insurance is a method to transfer the loss of person to the insurance company which can easily spread it over a large number of policy holders.

2. The Insurance is a Contract:  Between two parties (insurer and insured)  A certain sum is charged, called premium (Consideration)  A guarantee to pay ( by insurer to insured) payment will be in a certain definite sum ( i.e. loss or policy amount)

3.  Functional Definition  Legal Definition

4.  Insurance is a co-operative device by which risks are distributed among large number of persons.  Insurance provides security against losses or risks.  Insurance is a plan in which losses of uncertain events are secured.

5.  It is a contract  whereby an insurer assumes the risk of insured  and promises to pay a specified amount  on the happening of a specific event  in consideration of the premium paid by the insured.

6. 1. Sharing of Risk 2. Co-operative Device 3. Value of Risk 4. Payment at Contingency 5. Amount of Payment 6. Large number of Insured Persons 7. Insurance is not a Gambling 8. Insurance is not Charity

8.  Certainty  Protection  Risk-sharing

9.  Prevention of loss  Provides Capital  Improves Efficiency  Helps Economic progress

10.  Inculcates Habit of Savings  Expansion of Foreign Trade  Social Security  Checks Inflation  Credit Facilities  Self-confidence and Goodwill