Indemnification

 Indemnity
To protect or insure is called "indemnify". Protection against penalties incurred by one’s actions is called indemnity. As stated, life insurance is usually not considered to be indemnity insurance, but rather "contingent" insurance i.e. a demand arises on the occurrence of a specified event. There are generally two kinds of insurance formal agreement that seek to indemnify an insured:
I. An "indemnity" policy and
II. A "pay on behalf" or "on behalf of policy.
The way in which things are not the same is significant on paper, but uncommon material in practice.
The  "indemnity" policy will never pay the claims until the insured has paid out of pocket to some third party; for example, a visitor to your home narrow place on a floor that you left wet and asks you for $10,000 and wins. Under an "indemnity" policy the homeowner should have to come up with the $10,000 to pay for the visitor's fall and then could be "indemnified" by the insurance carrier for the out of pocket costs.
Like in the same condition, a "pay on behalf" policy, the insurance carrier could pay the claim and the insured (the homeowner) could not be out of pocket for anything. So many modern liability insurance is written on the basis of "pay on behalf" language.

An entity looking to move from one place to another, risk becomes the 'insured' party i.e. once risk is thought by an 'insurer', the insuring party, by means of a contract, called an insurance 'policy'. Commonly , an insurance contract includes, at a minimum, the following elements: the parties , the premium, the period of coverage, the particular loss event covered, the amount of coverage i.e., the amount to be paid to the insured or beneficiary in the event of a loss, and exclusions (events  which are not covered).

An insured is so called to be "indemnified" against the loss covered in the policy. When the insured parties undergo a loss for a serious danger, the coverage gives a right or claims to the policyholder to make a 'claim' against the insurer for the covered amount of loss as specified by the policy.
The amount paid by the insured to the insurer for taking the risk is called the 'premium'. Insurance premiums from many insured’s are used to fund accounts reserved for later payment of claims—in theory for a relatively few claimants—and for expensive costs. So as long as an insurer maintains satisfactory financial sources to set aside for expect losses (i.e. reserves), the remaining margin is an insurer's gain.