What is principal of insurance?

Answer 1

It's a bet.
You bet you'll die soon, or your house will burn down or your goods be stolen by burglars, or you'll be thrown out of your job. You place your bet, on a monthly or annual basis with your bookies, sorry, insurers.
On the other hand, your insurers bet none of these things will happen to you, and take your bets on a regular basis. Automatically, through your bank.
If your house burns down, or you die young, you win. Sort of. If nothing bad happens, or if you live to a ripe old age, they win. No argument there.
No need to talk to actuaries to discover your chances of winning: you can tell by the stakes, sorry, the premiums. The lower the premiums, the less your chances of the insured event happening. The higher the premiums, the greater the chances it'll happen to you.
With extended life expectancy now, your bookie can be pretty sure you'll pay them quite a lot before they have to pay up. They get all your stakes, and all the interest on your stakes, sorry, premiums, and whatever happens to you over the years you can bet the fine print will be carefully scrutinised just in case you didn't die right, or didn't lock your security doors.
Not that I'm cynical. But insurance is, in principal, simply another type of gambling. And, as in all forms of gambling, the house never, ever, loses in the end. But we all need insurance in some form at some time; we simply need to be sensible about it.

For example: there's no point in a young, single person with no dependents taking out life cover; they'd be better off saving towards buying a house. Later, married, with kids and with their house being paid off, they truly need financial protection.

It's important to carefully consider, then, what kind and how much protection to buy; your future and that of your family and, perhaps, employees, could depend on it.