The simplest way, insurance may be regarded as a protection against financial hardship due to losses arising out of an event or an insured or a risk management device. This is often be a difficult concept to sell to anyone, especially since it seemed so negative. Insurance best light is the inclusion of adage "better safe than sorry."
Premium payment is the amount the insured pays the insurance companies which covers the risk he is exposed, which is distributed to people under the same risk. The calculation of fees depends on the following factors: the risk or event, exposure, the circumstances that affect the level of exposure in May, the number of people on both risk and cost of loss. That's why some people pay a premium more important than others because they are more likely position to require payment.
Risk is a possibility that can happen that result in injury or loss. The basic principle is that risk exists, but the duration of the event causing the injury is unknown, and though it may be known, it will not be stoppable. (The way the fire is a risk, we know this can happen, but not always when. Or, in case of tornadoes, there are areas prone to tornadoes, but we do not stop one.)
Compensation value of an insurance policy or a "pay-out is the amount of compensation (compensation for loss due to insured against the risk). In the case of property, which is often less than fair market value of goods or items provided (such as car or house), but for people in life which does not equal money, it can go high or low as the policyholder can afford. Life insurance will not reimburse the loss of life is just something to look any financial difficulties this may cause a loss.
With ten people living in a building with the same job, and the same property. They were all exposed to the same level of construction risk of getting caught fire. If a tenant, but legal, but the store flammable materials in his apartment, his risk is higher, so it will pay higher premiums. If other tenants decided to "fire proof" most of his property, the premium payments are lower. If the building is near a fire station, the risk of injury is reduced, and the payment of premiums also lower. If the building is near a chemical plant, burning, that premium payments are higher. These are very simplified explanation of everything, of course, but it is only intended to provide a better understanding for the uninitiated.
