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For a layman the term Insurance can be quite a confusing term. A layman need not necessarily know that insurance is defined as an equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. However, the growing resurgence of our economy and higher disposable incomes have created a general interest in this field amongst many.

However, insurance is not a newly developed phenomenon. It has been present over centuries even in traditional societies. Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practiced by Chinese traders as long ago as the 3rd BC. Chinese merchants traveling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. Insurance is a trillion dollar business that employs more than 2.5 million people in the United States alone. In the recent years the insurance industry has grown over 9.0% at an average.

Lives in such nations are almost unimaginable without insurance. India is soon catching up on this with more and more market players offering a plethora of options and features to people belonging to various income groups. There are numerous kinds of insurance. For example, life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity. The need for insurance is to manage risk effectively. It also means being prepared for the unforeseen and predetermined events of life. Such events definitely make us apprehensive about our future but insurance helps us to be better equipped in such times. Also, some insurance such as life insurance can help in paying off debt. On the other hand, liability will only cover what you are liable for. The main purpose of life insurance is to cover the survivors of the person who dies. Life insurance can be used to pay off debt, cover burial expenses or take care of surviving children. Life insurance can be very important, especially if you are leaving a spouse who doesn't work, young children, or debts. In the event of your death, the life insurance company would award the amount of the policy to your beneficiaries. In addition to this there can be several tax related benefits offered under some sections of our Income tax rules and regulations.

However, a last word of caution; it is very important to consider the financial stability and strength of an insurance company purchasing an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent. A number of independent rating agencies provide information and rate the financial viability of insurance companies.