An insurance policy represents a cost-effective way to manage and protect against the risk of unexpected events. It is achieved through pooling together with others via an insurance company; if a large number of people pay a small premium to an insurance company, then if for example, one of those people falls ill, then there is a lump sum or income available to give to that person.
Saving £50 per month into a bank account for 12 months would generate £600 plus interest. In contrast, buying an insurance policy for £50 per month might purchase £200,000 of cover payable on serious illness.