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Life Insurance

Guide to Life Insurance


Life insurance is a kind of coverage that just about anyone can acquire as an important part of financial planning and family protection. It can help families get through the most crushing of events and challenging of times.

What it is

Life insurance is primarily designed to extend financial assistance to the named survivors in the event of a policyholder’s death. The payout can be utilized for such things as funeral expenses, remaining debt repayment and, for those still living, proper estate planning and even, in many cases, for financial help and flexibility from certain loan capabilities through the policy.

How it Operates

The policyholder will normally pay a monthly premium and, in exchange, the insurance provider can pay out a specified amount when policy protection is activated. The money is then awarded to the individual(s) known as the “beneficiary.” This person can then choose how the funds should be put to use. The benefits may also be directed toward a trust, from which funds can then be paid out according to the terms of the trust. The responsibilities of the insurance provider are usually comprehensively put forth in detail in the original contract text.

Kinds of Coverage

There are a few different kinds of policy coverage available. Whole life is a very popular type of comprehensive life insurance coverage. Policyholders pay their premiums, which are determined from a battery of health questions and the amount of coverage requested. Assuming the policyholder pays his or her premiums on time and consistently, the policy coverage remains in effect. Another popular option is term insurance. Term, on the other hand, provides similar coverage but for only a set period of time and, attractively for many, at a lower premium. For instance, should a policyholder carry a 15-year term policy, he or she will be covered for the 15-year period. However, after that period expires, one must then purchase new coverage. Universal life extends similar coverage as whole life, but there is also the option of investing some of one’s premium payment.  This potentially can result in a nice increase of the benefit amount over time (and more quickly) should the investment strategy see the results many would expect.