Life insurance is a contract between you and an insurance company, where the insurer promises to pay a designated amount of money, known as the "death benefit," to your beneficiaries upon your death. In exchange, you agree to pay regular premiums, either monthly or annually, over a specified period or for your lifetime.
Key Components of Life Insurance:
- Policyholder: The person who owns the insurance policy and pays the premiums.
- Insured: The person whose life is covered by the policy. In many cases, the policyholder and the insured are the same person.
- Beneficiary: The person(s) or entity who will receive the death benefit upon the insured’s passing.
- Premiums: Regular payments made by the policyholder to keep the policy active.
- Death Benefit: The amount of money paid to the beneficiaries upon the insured's death.
- Policy Term: The duration for which the policy is active, which could be a set term or the insured's lifetime.
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