Life insurance is a contract that guarantees the insurance company will pay a lump sum to your beneficiaries after your passing. This lump sum is known as a death benefit and can be used to help your loved ones cover funeral and medical costs, among other things.
The two most common types of life insurance policies include term life insurance policies and permanent life insurance policies. Term life policies only last for a set number of years before the policy expires, while a permanent life policy lasts for the rest of the policyholder’s life.