Insurance is a contract where the insurer agrees to pay compensation for loss on a specified item in exchange for premium payments. There are key terms like insurer, insured, premium, risk cover, perils, and maturity benefit. Insurance can be classified by nature, business point of view, or risk. Major types include life, fire, marine, social, and miscellaneous. Life insurance covers death risk while fire insures against fire damage and marine covers ship/cargo losses at sea.