A life insurance policy is a contractual agreement between an individual (the policyholder) and an insurance company. The policyholder pays regular premiums to the insurance company, and in exchange, the insurance company provides a death benefit to the designated beneficiaries upon the death of the insured person. The primary purpose of a life insurance policy is to offer financial protection and support to the policyholder's dependents or beneficiaries.
Financial Protection for Loved Ones - For individuals with dependents, such as spouses, children, or aging parents, life insurance can be crucial. It ensures that loved ones are financially supported and can maintain their standard of living if the primary breadwinner passes away.
Financial Management Tool - Life insurance can be used to settle outstanding debts, such as mortgages, personal loans, and credit card balances. Life insurance proceeds can be earmarked to fund education expenses for children or other dependents.
Peace of Mind - Knowing that loved ones are financially protected can provide peace of mind for the policyholder. It allows individuals to face the future with confidence, knowing that their family's financial well-being is secured.
Legacy Planning - Life insurance allows individuals to leave a financial legacy for future generations or contribute to charitable causes by designating beneficiaries or donating a portion of the death benefit.
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