What best describes insurance?

Insurance is a financial product that provides protection against potential future losses or damages by transferring risk from the insured to the insurer. Policyholders pay premiums in exchange for coverage, which compensates them in the event of specified incidents, such as accidents, illnesses, or property damage. It serves as a safety net, helping individuals and businesses manage uncertainty and mitigate financial hardships. Ultimately, insurance fosters stability by enabling risk-sharing among a large group of people.