Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. It is like a transfer of financial risk of a loss, from one entity to another, in exchange for payment. There are two parties involved in insurance. They are: the insured (policy holder) and the insurer (insurance company). The policyholder pays a certain amount of fees (premium) at regular intervals to the insurer. And in return, the insurance company agrees to cover the financial losses and expenses of the policyholder. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.