What it is
Life insurance is a special type of insurance that primarily protects a family or other important people against the death of a breadwinner in the household. Although this is the most common usage of these kinds of insurance packages, it is definitely not the only way to use it. As a matter of fact, some whole insurance packages can actually be used while the insured person is still alive in certain cases.
Who it is for
Many people believe that a life insurance package is only meant for people who are rich. It is somehow a luxury. This is definitely not the case. Everyone can be protected by this kind of an insurance package, and anyone with assets to protect for a family to take care of should consider this kind of insurance very deeply before saying that it does not apply at all to the household.
How it works
The most common benefit in this kind of an insurance package, the death benefit, pays out a predetermined amount of money upon the death of the insured person. However, there are many ways in which the insurance package can. For instance, whole insurance packages can build equity while the individual paying into it is still alive. This equity can be used in the same way as a loan from a bank.
This insurance package can also be used to protect against the cost of passing assets to family members upon the death of the breadwinner in the family. This kind of insurance only pays out if the premium on the insurance has been paid up until the point that the payout is requested.
Different types of coverage in existence
There are two major types of insurance packages – term insurance and whole insurance.
There is a major benefit considering that this insurance package protects against the death of a breadwinner in a family. However, there are many other benefits that can be used depending on the financial savvy of the family and the size of the insurance package.