he _insurer_; the written contract of insurance is the _policy_;
and the price paid by the insured in fulfillment of his part of
the contract is the _premium_; the amount paid when a loss has been
incurred is the _indemnity_; and the person to whom the indemnity is
paid is the _beneficiary_ (who may or may not be the insured).

The insurance with which we are here concerned is that which gives
financial indemnity. This is given for loss of expected net income,
when by chance either receipts are less or costs are more than
average. The two main classes as regards kinds of loss are property
insurance and personal insurance. _Property insurance_ is that which
indemnifies for loss of one's possession in specified ways, such as by
fire, by the elements at sea (marine), by hail, lightning, or cyclone,
by death (of valuable animals), by robbery, and by breakage (of window
glass). _Personal insurance_ is that which indemnifies the beneficiary
for loss of income as the result of various happenings to persons,
the chief being death, accident, sickness, invalidity, old age, and
unemployment. The principle of insurance is being constantly extended
to new subjects[2] and it is capable of further development in a
variety of directions.

Sec. 5. #Insurance viewed as a wager.# Insurance, without question a
highly useful thing, appears, paradoxically, to be in its outer form
a bet. The large merchant with many vessels used in many kinds of
business had in the days before marine insurance an advantage in
distributing his losses over a number of voyages. Antonio, the wealthy
merchant, is made thus to express his security:

"My ventures are not in one bottom trusted
Nor to one place; nor is my whole estate
Upon the fortune of the present year.
Therefore my merchandise makes me not sad."

In its early form marine insurance was the attempt of smaller
ship-owners to distribute their losses (as could the wealthy merchant)
over a number of undertakings, lucky and unlucky. It became customary
for a ship-owner to bet with a wealthy man that the ship would not
return. If it did come back, the owner could afford to pay the bet;
if it did not, he won his bet and thus recovered a part of his loss.
Gradually there came about a specialization of risk-taking by the men
most able to bear it. They could tell by experience about what was the
degree of uncertainty, and could lay their wagers accordingly. When
several insurers were in the same b