Insurance is where you pay money to a company, and in turn they promise to pay you if certain bad things happen.
Examples:
• for home insurance they might pay for your house to be repaired if it gets damaged.
• for credit insurance they might repay all or part of a loan if you lose your job.
It is a way to protect yourself against loss.
Insurance has a "policy document" that has special conditions, such as when they will or will not pay.
Example: for car insurance they won't pay anything if you damage your car on purpose.