Life Insurance
Life insurance is a contract between an individual and an insurance company where the individual pays premiums and in return, the insurance company agrees to pay a death benefit to designated beneficiaries upon the individual's death. The purpose of life insurance is to provide financial protection for the policyholder's loved ones in the event of their death.
There are two main types of life insurance:
- Term life insurance: provides coverage for a specific period of time, such as 10, 20, or 30 years. Premiums for term life insurance are typically lower than permanent life insurance.
- Permanent life insurance: provides coverage for the entirety of the policyholder's life, as long as premiums are paid. Permanent life insurance policies include Whole life, Universal life and Variable life insurance. The premiums for permanent life insurance are typically higher than term life insurance but offer additional benefits such as cash value accumulation.
Life insurance can be used to help provide financial security for the policyholder's family and loved ones, to help pay for final expenses, to provide an inheritance, or to help pay off debt and mortgages.
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