subject: What is Life Insurance? - Things You Should Know [print this page] What is Life Insurance? - Things You Should Know
At the most basic level, life insurance is defined as insurance coverage that provides protection in the event of death of the insured person. The benefit is paid to a named beneficiary that is chosen at the time that the policy is purchased, provided that the death occurred in a manner that is congruent with the policy regulations and terms. This type of insurance has been popular for a long time among all types of people, and yet is still widely under-utilized by many people throughout the country. A basic understanding might make it easier to buy coverage for some.
Life insurance comes in many types of policies. Each policy has a death benefit, a premium that is paid, and specific terms and conditions that need to be met in order to remain in effect or be used properly. Some life insurance policies also have another element: cash value. Having a death benefit sometimes isn't enough for people who want to protect their wealth or increase their protection, which is why some life policies offer the cash value account that can be invested and earn a bigger return for people.
There are two basic types of life coverage in terms of policy provisions and length of coverage. Within that, there are many different individual policies that can be purchased. The two main categories of life coverage are term life and whole (permanent) life protection. Term policies are purchased for a specific period of time. They generally have fixed payments, a fixed death benefit, and will cost more at first but less over the course of time because the premium doesn't usually increase. Whole life policies will be in effect for a person's whole life, and have fixed death benefits. However, these policies generally have increasing premiums that rise as a person ages.
When you shop for life insurance, there are many different things that you have to look at. Ultimately, you really need to take the time to explore the different options for coverage and find a policy that suits your needs. If you need a basic life policy with a death benefit, you will likely find affordable options with ease. If you prefer a policy that includes an investment option or cash value, you might spend a little more to get more in the long run. Either way, it doesn't matter as long as you understand life insurance and that you need protection.
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