Insurance might seem complicated and difficult to understand, but it's really very simple. It's all about pooling resources.

When you buy insurance, your premium payments go into a large "pool "of funds managed by the insurance company, from which claims are paid. Because there are more people contributing to this pool than there are people making claims, there should always be enough to help those who need it, even when the claims are for serious accidents or illnesses - requiring large lump-sum payments.

Meanwhile, Insurance companies can take out insurance also - with 'reinsurers' - to make sure they can meet their promise to their policyholders.

Annual premiums are set according to how much money will be needed to cover the cost of claims in the year ahead. Your premium reflects the likelihood of you making a claim. The more likely that is, the higher your premium will be.

A number of factors are taken into consideration when calculating this probability. That's why we ask a lot of questions when you apply for cover.

Insurance can't guarantee a life free of accident or misfortune, but it can help you cope with the financial consequences of unpredictable events, giving you and your family peace of mind that help will be at hand should the worst happen.

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