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Life Insurance

Life Insurance Policies

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Life insurance is an agreed upon payment given to someone's heirs when they die. The policyholder takes out the insurance policy during their lifetime. The policyholder agrees to pay a certain sum of money generally each year. In turn, the insurance company guarantees that once the policyholder dies, the insurance company will pay money to the policyholder's heirs or estate.

Insurance is designed to help make sure someone's heirs are fiscally secure even in the event of their death. For example, a mother who is not in the workforce may be married to someone who is working. Should that worker die in an accident or from an illness, the insurance policy will pay her a sum of money. The sum is designed to help ease the fiscal burden she would face if he died unexpected and left her without an income. The insurance policy can also be used in other ways such as to help her kids pay for college expenses. It may also be designed to go to a charity on holder's death.

In general, someone seeking out an insurance policy will contact an insurance provider. The company sends someone to make sure the person is healthy and not suffering from long-term illness. The insurance company then makes a written agreement with the person. The policyholder will pay a certain sum of money such as a few hundred dollars per year. In turn, the insurance company will agree to make sure the policyholder receives the funds they agree upon once the holder passes away.

The insurance may vary in length. Many policies are only for a few years. This is known as a term insurance policy. Others are for the person's entire life. This is known as whole life insurance. The former does not accumulate any value. The latter has a cash value that can be borrowed against.

This form of insurance has certain benefits. Money received as a result of such as policy is not taxed at all. The policy holder can relax knowing that their heirs are provided for in case of emergency.


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