Insurance-Linked Securities (ILS) are financial instruments that allow investors to gain exposure to insurance risks. These securities are typically linked to specific insurance events, such as natural disasters, and provide a way for insurance companies to transfer some of their risk to the capital markets. Investors receive returns based on the performance of the underlying insurance policies. ILS can take various forms, including catastrophe bonds and sidecars. They offer potential high returns, but they also come with risks, as payouts depend on the occurrence of insured events. This makes ILS an interesting option for diversifying investment portfolios.