What is Life Insurance?
As an adult, our lives require certain insurances that cover the most valuable things that we possess. Nearly everyone has car insurance, and most likely a policy that covers the home that you rent or own. These types of insurance provide financial protection to you in the case of an incident that causes damage and loss. However, there is one thing that many people put off insuring, which is their life.
Perhaps you have thought about getting life insurance, perhaps not. No one likes to think about their mortality, but a life insurance policy is vital to financially protect those who depend on you in the case that you should pass away. Today we are going to talk about what life insurance is and why it is important to get such a policy in place.
Simply put, life insurance is a legally binding agreement that you make with an insurance agency in which you pay them an agreed-upon sum each month. Then, if you should die, they pay out a set sum of money or death benefit to your chosen beneficiaries. It obviously is not enjoyable to think about death, but a good life insurance policy is put in place to protect your loved ones that will still be living.
The money that is paid out by a life insurance policy can cover a myriad of expenses that may be left behind after death such as funeral expenses, unpaid debts, and other financial obligations that may exist like a mortgage. Having good life insurance coverage in place can provide you and your family members with peace of mind knowing that if something were to happen, they will be protected financially.
In order to understand how life insurance functions, let’s quickly look at what components you can expect to see in a policy.
- Policy: the contracted agreement between you and your insurance provider
- Policyholder: the policy owner and one typically insured, although you can purchase life insurance for another party
- Insurance Premium: the payments you make to keep your policy active and in good standing
- Death Benefit: the money paid out if you pass away
- Beneficiaries: the recipients you choose to receive your death benefit
We hope that this overview helps you to better understand what life insurance is and how it can provide needed protection to your loved ones. To learn more about the best life insurance products to fit your needs, call Compare today.