ABSTRACT
Insurance is like a good because it brings utility. In particular, insurance brings peace of mind. By buying an insurance policy, the insured person pays a premium in exchange for the protection in the covered period. Something is sacrificed; something is gained. There are two things that are gained. One is peace of mind. This is an immediate benefit. The other is the savings in cost or the compensation against losses that are contingent on the insured state of the world materializing. This is a contingent benefit.
