Life Insurance Works.

How Life Insurance Works

Understanding the Basics of Life Insurance

What is Life Insurance?

Life insurance is a contract between you (the policyholder) and an insurance company. In exchange for regular premium payments, the insurer promises to pay a lump sum of money to your beneficiaries upon your death.

Types of Life Insurance

• Term Life Insurance: Provides coverage for a specific period (e.g., 10, 20, or 30 years). If the insured dies during this term, the beneficiaries receive the death benefit.
• Whole Life Insurance: Provides lifelong coverage. It includes a death benefit and a cash value component that grows over time.
• Universal Life Insurance: Offers flexible premiums, a death benefit, and cash value. Policyholders can adjust the premiums and coverage amounts.

How Does Life Insurance Work?

When you purchase a life insurance policy, you agree to pay premiums (monthly or annually) for a specified period or throughout your life. In return, the insurance company promises to pay a death benefit to your beneficiaries when you pass away. The amount of the death benefit depends on your policy.

Why Life Insurance is Important

• Financial Security: Life insurance provides financial support to your family in the event of your passing, helping cover funeral costs, outstanding debts, and everyday living expenses.
• Peace of Mind: Knowing that your loved ones are financially protected can give you peace of mind.
• Wealth Transfer: Life insurance can also serve as a tool to transfer wealth to the next generation or support charitable causes.