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What Is Life Insurance?
Life insurance policies come in all shapes and sizes, with each one designed to pay money out when someone dies - helping family or other beneficiaries pay bills or expenses such as funeral costs or to replace lost income or make down payments on homes for example. Some policies even build savings that the insured can access during their lifetime.

Death benefits of life insurance policies are tax-free and provide financial security for anyone relying on you financially, such as children, spouses, partners or even parents. Life insurance may also come in handy for paying off debt, making a down payment on a house or covering medical costs associated with terminal illnesses.

Life insurance policies are an agreement between an insurer and policyholder in which regular payments, known as premiums, are made and when someone dies the insurer promises a lump sum payout. Premium payments may either be regular or lump sum depending on the policy type; some policies even offer cash surrender values which may be withdrawn during life but this would reduce both death benefits and total cash value of their policy.

There are two basic forms of life insurance coverage, term and permanent. Term life is generally less costly, offering coverage for a set period. Permanent policies provide lifetime coverage so long as premiums are paid on time.

Life insurance policies cover various causes of death, such as illness, accidents and suicide. However, they often undergo a contestability period--usually no more than two years post purchase--during which time a company can review the information provided on an application form and investigate any misrepresentations allegations made about an invalid claim made on it. Should they find this to be invalid then any premiums paid should be returned back to beneficiaries as compensation.

Most policies contain a clause that eliminates their death benefit if the insured commits suicide within a certain timeframe, usually two years post purchase. Furthermore, some companies may limit coverage in cases involving high-risk activities like skydiving.

Owners of life insurance policies are known as owners, while the person insured (who will receive their death benefit) are known as insureds. Both individuals may be the same or can differ. Policyowners also frequently have the ability to add beneficiaries who can claim on the death benefit should their policyholder pass away.

everyday life insurance require applicants to undergo a medical exam prior to being accepted by an insurer, while other policies offer expedited underwriting, eliminating this step entirely. Cost of life insurance policies depends upon various factors including their duration, size and terms and conditions - these will ultimately determine their price tag.
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