Life Insurance Basics
Life insurance is coverage that pays a benefit when you die. The benefit is paid to your beneficiary. The money can be used for anything, including paying medical bills and funeral costs.
The main point of life insurance is to provide financially for your family once you’re gone. If anyone relies on you for income, then having life insurance will help them financially. It’s also good if you want to make sure no one else has to foot the bill for your funeral or medical expenses.
How Does It Work?
As mentioned earlier, the plan pays money to your beneficiary once you die. You designate the beneficiary when you buy the policy. There are different types of policies available.
Term life plans focus on paying a fixed amount to the beneficiary. There is no investment option, and the policy doesn’t increase in value. The plans are also only in effect for a specified length of time. If you die during that term, then the provider will pay the designated amount to the person you designated in advance. Whole life plans do not come with a limited term. As long as the premium is paid, it will remain in effect.
The main benefit of life insurance is it provides financially for your family. They will have help paying for your final expenses, like funeral and medical bills. If any money remains, then they can use it as they wish.