what is life insurance and how does it work?
Life insurance is a type of insurance policy that provides financial protection to your loved ones in the event of your death. When you buy a life insurance policy, you pay a regular premium to an insurance company. In exchange, the insurance company promises to pay a lump sum of money, called a death benefit, to your designated beneficiaries upon your death.
Types of Life Insurance
There are two main types of life insurance policies: term life insurance and permanent life insurance.
Term Life Insurance –
Term life insurance provides coverage for a specified period of time, such as 10, 20, or 30 years. If you die during the term of the policy, your beneficiaries receive the death benefit. If you survive the term, the policy ends and there is no payout.
Permanent Life Insurance –
Permanent life insurance, on the other hand, provides coverage for your entire life, as long as you continue to pay the premiums. Permanent life insurance policies typically have a cash value component, which can grow over time and be used for things like borrowing against or withdrawing from the policy.
Life insurance can help provide financial protection for your loved ones if you pass away unexpectedly, allowing them to pay for expenses such as funeral costs, outstanding debts, or ongoing living expenses. It can also provide peace of mind, knowing that your loved ones will be taken care of financially after you’re gone.
