General Life Insurance Definition
The life insurance definition includes numerous elements that pertain to protecting the financial future of your family or loved ones. In the event of your death, a life insurance policy can create monetary stability for your beneficiaries, but it can also provide many additional financial benefits.
Basic Life Insurance Definition
The basic life insurance definition is an insurance policy that pays out a lump sum to your family upon your death. Such policies are paid for by a premium over a period of time and the amount paid out to your family is determined when you set the policy. There are several types of policies that vary in benefits, timeframe and price. Life insurance polices can cover basic death expenses, as well as other large expenses or offer a cash value that can be collected prior to your death.
Different Types of Life Insurance Definitions
The life insurance definition also includes various types of policies, such as whole life, term coverage or universal insurance. Depending on your needs, you should choose a policy that best fits.
Whole Life Insurance Definition
The whole life insurance definition offers coverage for just that – your entire life. It is a life insurance policy that pays the benefit, or lump sum of the policy, on the death of the insured. This type of policy also accumulates a cash value, which allows the policyholder to withdrawal cash once the policy has accumulated funds. Premium payments are usually fixed, based on the age of the insurer and do not increase with age. Payments are made through your lifespan, but some companies offer limited policies that can be paid in 10 – 20 years.
Term Life Insurance Definition
The term life insurance definition is life insurance that covers a specific period of a person’s life and pays a lump sum benefit to beneficiaries during that time, should the insured die. Once the policy expires, the insured is no longer covered. It is the most affordable life insurance plan, but it does not provide any returns, such as a savings or payout upon expiration.
Universal Life Insurance Definition
The universal life insurance definition is a permanent life insurance policy that is flexible and allows the low-cost coverage of term life, but also includes a savings plan. The savings element to a universal life policy allows the insurer to build up a cash value that is invested. The death benefit, savings element and premium payments can be adjusted at any time. And, the insurer can use part of the accumulated cash value to make premium payments.
The life insurance definition includes many different policies with different definitions. Basically, life insurance is purchased to protect the financial future of your family or loved ones upon your death. It is a smart move for those who are the main source of income for a family.