Life Insurance Life insurance can cover loss of revenue, funeral expenses, debt, and other financial needs that might come up after you pass away once you sign the agreement and start a monthly payment.
How Does Life Insurance Work? Understanding a life insurance agreement can feel like the most boring thing, but you really only need to categorize a few common life insurance terms to help you know how it works: ● ● ● ● ●
Policy — the contract was done between you and the insurer Premiums — monthly or annual payments you make to own the insurance policy Policyholder — the holder of the policy, which would normally be Death Benefit — the money given when you pass away Beneficiaries — the people you select to get the death benefit of your policy like your spouse or children, etc.
Types of Life Insurance Let’s start with the essentials. There are two main types of life insurance: one that continues for a set number of years (term life insurance) and one that lasts through your entire life (permanent life insurance).