Almost everyone needs some kind of insurance cover during his or her life. It may be health or life insurance, house insurance, or another type (against crop damage, bad weather etc.). So that compensation may be paid out when losses are incurred, it is necessary to take out an insurance policy. The insurance policy is a contract (generally a standard form contract) between the insurance company and the customer insured, who is called the policyholder. The contract sets out the terms under which the insurer is required to pay by law. The payment is known as the premium.
The insurance company pays for damages to the insured party, which arise due to events described in the insurance policy. Insurance contracts meet specific needs. For this reason, they include many features not found in many other types of contracts. For instance, life insurance will take into account the lifestyle habits and age of the insured person.
Premiums differ greatly. I pay around 500 Euros a year for my household insurance. This covers losses to due break-ins and theft and fire damage, amongst others. My car insurance costs around 400 Euros a year. This is quite reasonable since it is not a full cover policy, but as the car is a small one, it is considered an average payment.
