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What Is Life Insurance?
Life insurance policies offer beneficiaries of the insured a lump sum payment (known as the death benefit) upon death of the policyholder, while depending on its type, can also provide payments in case of terminal illness or critical illness. As payment for this coverage, policyholders are charged a premium that must either be made monthly throughout its term or as one lump sum upon purchase of their policy.

Life insurance provides financial security for your loved ones after your death, helping your family pay bills and cover funeral costs. A financial professional can assist in determining how much coverage is necessary and which policy type best meets your situation.

Once you've determined how much life insurance coverage is needed, the next step should be comparing providers and policies. This involves identifying initial premium payments as well as potential premium increases over time as well as any extra death or living benefits1 available until death occurs.

Many people opt for whole life insurance, which guarantees coverage throughout your entire lifetime as long as your premium payments continue. Although it typically has higher upfront costs than term policies, whole life policies provide flexible premium payments and the opportunity to build cash value over time.

Variable universal life insurance (VUL), a hybrid policy that allows you to tailor your coverage by adding or subtracting from death benefits and cash values, offers flexible premium payments and may have an effect on death benefits and cash values, is also becoming an increasingly popular choice. While VUL policies provide you with flexibility in terms of customizing coverage to your needs, any changes may affect them negatively as they have the potential of having an effect on death benefits and cash values in turn.

Other options for life insurance coverage are indexed universal life policies, which offer higher cash values than traditional variable universal policies and are tied to an index such as S&P 500 performance. Although premiums for this form of life insurance might be lower than traditional variable universal policies, returns cannot be guaranteed.

When purchasing life insurance, you will need to name at least one beneficiary - this may be either an individual or entity like a family trust. You can also divide up the death benefit among multiple individuals/entities (for example 30% for each of three children and 10% going directly to charity).

Life insurance serves two key purposes, providing protection for unexpected financial hardship and estate planning purposes. Depending on everdaylifeinsurance.com of policy chosen, other benefits could also include giving more in death than during life and tax-deferred growth.
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