A nagging question that confronts the educated elite is "How is insurance different from gambling?" Let us examine the fundamentals of insurance under a legal framework and a mathematical perspective. Many among the educated elite ask this question. Let us examine these to see the differences. Gambling is a game of chance with large stakes. Though a speculative venture, it is indulged in the expectation of making a `kill'. This may be a wager on the outcome of a horse-race or of winning a lottery or result of Cricket matches. One gambles when one looks for fun, for a jaunt, for a kick, or for making money.

Insurance, on the other hand, provides guarantee of compensation, for loss/damage/sickness/death etc.; in return for regular premium payments. Then, why is insurance compared to gambling when they are conceptually different? There are certain common features in these two types of transactions. Both rely on the theory of probability for ascertaining the final outcome. There is also the possibility of large gains in return for comparatively small outlays. In gambling, you know the odds and in insurance you can estimate the probability of loss. The similarities end here.