How does life insurance work?

Life insurance can be a key way to help protect the people you love. Here's a rundown of how it works, and whether it may be right for you.

Kaycie Gaige avatar
Written by Kaycie Gaige
Updated over a week ago

A life insurance policy is an agreement between you (the “policyholder”) and the insurance company (the “insurance provider”), that says that if a specific person passes away (the “insured”), while the monthly payments (the “premiums”) are paid-up, they will make a lump sum payment (the “death benefit” or the “coverage amount”) to the person or persons of your choosing (the “beneficiary”).

Check out our life insurance primer for more reasons why people get life insurance, how much it tends to cost and what type of policy may be right for you. 

Note that there are a few different types of life insurance, including term life insurance and whole life insurance

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