How Life Insurance Works
The policyholder pays premiums to keep the policy active. If the insured dies while coverage is in force and all policy conditions are met, the insurer pays the death benefit to the designated beneficiaries.
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Main Categories of Life Insurance
- ✓ Term life insurance covers a set period of time and is often chosen for income replacement or mortgage protection needs.
- ✓ Whole life insurance is a permanent policy that typically provides lifetime coverage and builds cash value.
- ✓ Final expense insurance is usually a smaller whole-life-style policy intended to help cover funeral and end-of-life costs.
Choosing the Right Coverage
The choice between term and permanent life insurance often depends on whether the need is temporary and budget-focused, or long-term with interest in lifelong coverage and potential cash value growth.