The Importance of Life Insurance: Understanding How It Works
Life insurance is a crucial part of financial planning, but many people are unaware of its importance. In this article, we will explore what life insurance is, how it works, and why it is essential to have it. What is life insurance? Life insurance is a contract between an individual and an insurance company. The contract requires the individual to pay premiums to the insurance company, and in return, the insurance company agrees to pay a death benefit to the individual's beneficiaries in the event of their death. Life insurance is designed to provide financial protection to the policyholder's family or loved ones in the event of their unexpected death. How does life insurance work? When an individual purchases a life insurance policy, they select a beneficiary or beneficiaries who will receive the death benefit if the policyholder passes away. The policyholder then pays regular premiums to the insurance company. The premium amount is determined by several factors, including ...