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What is life insurance?

Beginner's guides
What is life insurance? Image

The purpose of life insurance 

Life insurance serves as a safety net for your family and loved ones. Life insurance will provide them with a lump sum payment if you die. This payout can help cover various expenses, such as funeral costs, mortgage payments, living expenses, and more. Life insurance seeks to provide financial stability. It brings you peace of mind, knowing your loved ones are supported if you die.

The payout your loved ones will receive in the event of your death is called the death benefit. The death benefit amount is determined when the policy is purchased.

Paying for life insurance 

When you purchase a life insurance policy, you agree to pay into the insurance plan monthly. These payments are called premiums. The cost of your premium is based on your age, health, and lifestyle. Your premium will also be affected by the amount of money you would like your beneficiaries to receive when you die.

Types of life insurance policies to choose from:

Term Life Insurance 

Term life insurance provides coverage for a specific term or period. For example, 25 years. It offers a death benefit if the insured person passes away during the term of the policy.

Term life insurance is often more affordable than other types of life insurance and is suitable for those who want coverage for a specific period, such as to protect their family while paying off a mortgage or to provide financial support until their children are grown.

Whole of Life Insurance 

Whole of life insurance is a category of life insurance that provides coverage for your entire lifetime. Your loved ones will receive a payout upon your death no matter when you die. There is often a cash value component that grows over time.

Remember to compare policies to find the one best suited for you.