Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a reasonable premium and can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss. An insurer is a company selling the insurance; an insured or policyholder is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium.

Health insurance is insurance that pays for medical expenses. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government-sponsored social insurance program, or from private insurance companies. It may be purchased on a group basis or purchased by individual consumers. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare expenses.

You may have to buy health insurance policy as an individual if you do not get  it through your job. Individual coverage is harder to obtain, more expensive, and less consumer-friendly than job-based coverage. Some things to look for in an individual policy include: non-cancelable,i.e., guaranteed renewable coverage as long as you continue to pay the premiums; a 10-day rescission period,i.e., iIf you do not like the terms of the policy within the 10 days, you can cancel the coverage and get your premium back. The level of coverage available under individual health insurance policies varies widely. Thus, it is especially important that you understand all of the terms of your individual policy.