According to wikipedia "Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss." But in a layman's language, it is the transfer of a risk/potential or uncertain loss from the insured(the person who has the risk) to the Insurer(the company underwriting the risk) for a fee.
But one legal aspect of it which is often left out of the contract signing is[b] uberrimae fidei[/b] which is the latin for "utmost good faith". This is the governing principle behind all insurance contract. It requires that all parties to an insurance contract must deal in good faith, making a full declaration of all material facts in the insurance proposal. This is what draws the line between real claims and insurance fraud.
Therefore, the insured must reveal the exact nature and potential of the risks that he transfers to the insurer (which may, in turn, be sold onto a reinsurer), while at the same time the insurer must make sure that the potential contract fits the needs of, and benefits, the insured. Where this is breached, the contract becomes void. In such cases, any claim associated with such policy will not be paid by the insurance company.
To avoid this, I advise you read through the proposal form carefully by yourself and fill it truthfully, to the best of your knowledge.

Any questions?

I have often heard of people who complain about one Insurance company or the other, some say that they lost their money or they were not paid their claims.

If you have any of such issues let me know here. I might be able to help.

The three important things you must plan for if you want to be financially Independent and rich.

1. Savings
2. Insurance
3. Investments