UK Accounting Glossary
An insurance policy is essentially a contract between the insurer and the insured. The primary purpose of any insurance policy is to reduce financial losses resulted from various accidents or death by redistributing the risk among large numbers of people, also known as risk pooling. Specifically, the insurer agrees to pay the insured a specified amount in the event that the insured sustains a loss, as per the insurance policy agreement. In return, the insured is required to make premium payments in order to maintain the insurance policy. A given insurance policy may also include beneficiaries. An insurance policy is applicable to any form of indemnity, including life, health, casualty, auto, property, and etc. Insurers may offer insurance policy solutions to any individual able to pay, or may contract with companies to offer special rates for group insurance.
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This glossary post was last updated: 9th February 2020.