Life insurance

Life insurance

An insurance policy that pays a monetary benefit to the insured person's survivors after death.

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Life Insurance

An insurance policy where, in exchange for a premium, the insurance company pays a certain benefit to the survivors of the policyholder upon his/her death. Life insurance can help defray costs of the funeral, pay off the estate's debts, and may provide for the survivors' (notably a widow or widower) future. There are two main types of life insurance. Term life insurance lasts only for a certain period of time and pays the death benefit only if the policyholder dies during that time. Whole life insurance lasts as long as the policyholder remains alive and provides a savings component against which the policyholder can borrow under most circumstances.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Life insurance.

Life insurance is a contract you sign with an insurance company, obligating it to pay a death benefit of a certain value to the beneficiaries you name.

In most cases, the payment is made at the time of your death, but certain policies allow you to take a portion of the death benefit if you are terminally ill and need the money to pay for healthcare.

You may select either term or permanent insurance. With a term policy, you are insured for a specific period of time. When the term ends, you must renew the policy for another term or change your coverage. Otherwise, you're no longer insured. With a permanent policy, you can buy coverage for your lifetime.

You pay an annual premium, typically billed monthly or quarterly, for the coverage. The insurer sets the cost, based on your age, health, lifestyle, and other factors. With a permanent policy, your premium is fixed, but with a term policy it typically increases when you renew your coverage to reflect the fact that you're older.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.