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Insurance companies are the businesses that sell consumers, or companies, insurance policies, designed to protect the policy-holder against risks like theft, accidents, illness or lawsuits. The principle is quite straightforward, but individual policies will vary on terms and the premiums.
Insurance companies make their money from the premiums that people pay for insurance. Therefore, it is in the best interests of the insurance company that they assess the level of risk of each policy holder and charge the correct price for insurance cover. The higher the risk and financial cost of the loss, the higher the premium you will be asked to pay. Insurance companies can keep their costs down by insuring many people against the same risk.
Insurance companies can also help individuals put money aside for retirement by offering pension plans. Particularly with the larger national insurance companies, they can offer private pension schemes to supplement the basic state pension.
Smaller insurance companies are more likely to specialise in a particular type of insurance, from life and health insurance to travel and motoring.