Life insurance helps protect the financial security of those people in your life whom you choose to be beneficiaries by providing them a tax-free payment. It is fundamentally a contract between you and your insurance company that in exchange for your premium payments, the insurance company will pay a lump sum known as a death benefit to the beneficiaries you direct upon your death.
Beneficiaries such as your spouse, children, business partners and others can use the money for whatever purpose they choose. Often insurance payments provide the beneficiaries the ability to continue paying everyday bills, a mortgage or educational costs without financial stress. It is compared to a safety net that will ensure those you select as beneficiaries can stay in their home, continue at school or pay for the things that you planned for them as if you were alive.
There are two primary types of life insurance: term and permanent life. Permanent life insurance such as whole life insurance or universal insurance can provide lifetime coverage, whereas term insurance will only provide insurance protection for a certain period of time.
Depending on your age, gender, health, medical history and lifestyle, the payments premiums you will pay each month or annually will be reflected in the cost.