Insurance is a financial tool designed to protect individuals and businesses from loss. It works by providing policyholders with financial compensation in the event of an unforeseen risk, such as death, illness, injury, or destruction of physical property. Insurers pool risk among many policyholders and charge premiums in return for managing that risk. The result is a lower likelihood of large-scale losses, which helps to keep premiums affordable. By protecting against possible losses, insurance gives customers peace of mind and encourages growth through risk-taking by allowing companies to plan for the future with confidence.