The Basics of Life Insurance
Life insurance are policies between an individual and an insurance company which guarantees the policyholder a payout in the event of their death.
A rather morbid subject, life insurance is popular with people who are concerned that loved ones may be left in difficulty if they were to die. The cash can typically be used by the beneficiary however they wish - they could spend a payout on covering the cost of a funeral, keeping up with a mortgage, or general life expenses.
Life insurance cover may involve paying an insurance company an amount of money on a regular basis or paying the full cost up front, and this is known as the premium. A typical life insurance policy which involves a regular premium is a term life assurance plan, which covers the policyholder for a set period and will not pay out in the event of their death if it occurs after this period runs out.
All types of life insurance will come with their own limitations or exclusions. A policy document will lay down exactly what is covered and what is not covered. You can often expect an insurance company not to payout on a policy if the policyholder dies due to suicide, war or civil disturbance, for example.