27/01/2022
What is Insurance?
Today let us get to understand insurance in a layman's language.
Examples can include, car insurance and medical insurance for explanation. Insurance is a pot of risk, let me explain that; I own a car ,my friends Tom, Dick and Harry owns cars too.
Our cars are exposed to risks of being hit on the road by other vehicles, being stolen, burnt or still causing bodily injury or property damage to other people.
So the four of us approach an insurance company XYZ to insure our vehicles, what we are doing is transferring the risks to XYZ company. We transfer the risk by paying some amount of money called premium. The insurance company will accept the risks and use the money to create a pool to pay us/ compensate us incase any one of the four of us experience the insured risks.
On medical insurance, for example NHIF, the statutory body that collects the payment from anybody and creates a pool of money, with this money it will pay for the medical bills for those who fall sick.
I hope this made insurance a bit simpler for you, incase you have any question comment below or reach out on +254700822664 or via WhatsApp +25477446442