Life insurance protects your loved ones financially after you die. Learn exactly how life insurance works, how to get it, and what type of life insurance policy is right for you.
There’s one major benefit to buying life insurance: your loved ones are financially protected if you die unexpectedly. As the policyholder you pay a recurring amount of money – the premium – to an insurance company and if you die while the policy is active, the insurer pays out a tax-free sum of money – the death benefit
. The parties that receive the death benefit, typically your family members, are called the beneficiaries. The death benefit functions as an income replacement so that your beneficiaries can continue to afford housing, food, bills, and other expenses.
There are several different types of life insurance, but term life insurance usually provides the coverage most people need at the best price. The cost of your life insurance policy will depend on how much coverage you purchase, how long you want your life insurance policy to last, and how likely it is that you might die while you’re covered by the policy.
