What Is Life Insurance?
A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death.
The common types of life insurance are:
- Term life insurance – is intended to provide financial protection for a specific period of time, such as 10 or 20 years. With traditional term insurance, the premium payment amount stays the same for the coverage period you select.
- Universal life insurance – is a kind of permanent life insurance created to provide lifetime coverage. Unlike whole life insurance, universal life insurance policies are flexible and may allow you to raise or lower your premium payment or coverage amounts throughout your lifetime.
- Whole life insurance – is a type of permanent life insurance created to provide lifetime coverage. Because of the lifetime coverage period, whole life usually has higher premium payments than term life.
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