What is Life Insurance and How Does It Work?

What exactly if life insurance and how does life insurance work?

Life insurance is protection against the death of an individual person in the form of payment to a beneficiary - usually a family-member, business, or institution.

In exchange for a series of premium payments or a single premium payment, upon the death of the insured person, the face value of a life insurance policy, minus any loans or outstanding interest payments due, is paid to the beneficiary.

The proceeds from a life insurance policy naming an individual as the beneficiary is usually paid free from federal income tax.

Learn how a term life insurance policy works and find out why it's the most affordable type of life insurance plan.

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Defining Term Life Insurance

How do you define term life insurance?

Term life insurance is defined as a life insurance policy that stays in effect for a specified, limited period of time.

If the insured person dies within that period of time, the beneficiary receives the death benefit of the life insurance policy.

If the insured outlives the term of the policy, the coverage expires, and the beneficiary receives nothing.

Term life is not an investment, it builds no cash value inside the policy.

Most term life plans are offered for a period of 10, 15, 20, or 30 years.

Learn more about defining term life insurance.

NEW! Here’s How to Buy up to $500,000 of Term Life
Insurance without any Medical Exam,
Just a Few Health Questions.