Insurance Maze Blog

Feb 2

Life Insurance - The Basics

Category: Life Insurance post

February 2, 2008

Life insurance may be the most misunderstood form of insurance and could be the most important part of your overall insurance planning. Let’s take a look at some basic concepts of life insurance.

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What Is Life Insurance?

Basically life insurance is a contract between an insurance company (insurer) and the person on whose life the insurance policy is purchased (insured). Under the terms of this contract the insurer agrees to pay to the insured’s beneficiary a pre-determined amount of money at the death of the insured. Insurance premium must be paid in order to keep the policy in force.

Types of Life Insurance

You may have looked at many different life insurance policies, but basically there are only two different types of life insurance:

Term Life Insurance
Permanent Life Insurance

Need For Life Insurance

The need and type of insurance will vary depending on individual situations. The one thing you must understand about insurance in general is that there is no “this is how it’s done all the time” answer. Here are some things to think about in making your decision as to whether or not you need life insurance and in what amounts.

You may need life insurance if you have:

Partial or total interest in a business
One or more mortgages
A lot of debt
Children
A spouse
A parent or other relative who depends on you for support due to an illness or physical disability

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