How Does Life Insurance Work

By on June 19, 2014

The main reason as to why anyone would consider purchasing life insurance is to have peace of mind.

In the event of a disastrous accident or if you unexpectedly pass away, your life insurance will provide your beneficiaries with a sufficient amount of money to cover costs associated with your passing.

Also, many families are able to financially survive off of a family member’s life insurance policy. So, how does Life Insurance work?

The Basics of Life Insurance

How Does Life Insurance Work

Life insurance is basically an agreement between a policy holder and a life insurance company that states when the policy holder dies, their beneficiaries receive benefits in the form of monetary value.

The policy holder (you) will pay the insurance company a premium on a monthly or yearly basis that ensures that your family and/or beneficiaries will receive a payout once you have passed away.

The majority of financial assistance received from life insurance companies are either paid out in a lump sum or over a specific amount of time, also known as installments.

This money is paid completely tax-free, meaning the beneficiary keeps the entire benefit amount.

What are the Types of Life Insurance?

Different insurance companies will offer different types of life insurance, therefore it is important that you choose the correct insurer for your needs.

The two main types of life insurance are Permanent and Term Insurance.

  • Permanent life insurance is generally the most popular as it will protect you for the entirety of your life.
  • Term life insurance will expire within a certain amount of time.

Where Can I Buy Life Insurance?

As previously mentioned, it is important that you find the right company for your life insurance needs.

There are hundreds of different life insurance companies that offer different policies to individuals looking to acquire their own piece of mind. You may want to consider using the internet for find a life insurance company.

How Does Life Insurance Work where can i buy

With the use of the internet you can read customer reviews and gather an idea of what the company will be able to offer to you.

Also, the majority of companies offer their employees the opportunity to buy into a life insurance policy, therefore you may want to speak with your employer for more information.

Beware: A detriment associated with a life insurance policy with an employer is that once you lose the job, you also lose your benefits.

If you have a health condition, it may be more difficult, cost more money, or you may not be able to qualify for life insurance.

That’s why it’s important to make sure you have your own policy versus relying on a policy with an employer.

Life insurance is a great way to ensure that your family is sufficiently covered after your passing.

With the ability to rest assured that they have financial assistance, life insurance is quite beneficial.

How Does Life Insurance Work