What is Life Insurance?
A life insurance policy provides a financial safety net for your family in the event of your death. Essentially, when you purchase a life insurance policy, you’re exchanging regular premium payments for a lump sum payment, also known as a death benefit, to your loved ones when you die. It is essentially a contract between an individual and an insurance provider, where the company promises to pay a specified amount of money to the family or beneficiary of the individual, in return for regular payments over a period of time. These payments are known as premiums and are usually paid on an annual basis. The individual who buys the insurance is known as the policyholder.
How Does Life Insurance Work?
Life insurance benefits are typically paid when the insured party dies. Beneficiaries file a death claim with the insurance company by submitting a certified copy of the death certificate. Depending on the type of policy you have, life insurance can cover:
A. Natural Deaths
B. Accidental Deaths