A primary purpose of insurance is to:

The primary purpose of insurance is to protect against financial loss. Insurance serves as a safety net, providing financial security and helping individuals and businesses manage risks associated with unforeseen events, such as accidents, illnesses, or damage to property. By paying a premium, policyholders gain access to support that can cover substantial financial burdens, enabling them to recover from losses without devastating impacts on their finances.

For example, health insurance helps cover medical expenses, automobile insurance covers the costs associated with car accidents, and homeowner's insurance protects against losses from theft or natural disasters. This protective aspect of insurance is essential for financial stability, as it mitigates the financial repercussions of unexpected incidents, allowing individuals to maintain their financial well-being and pursue their goals without the added stress of potential losses.