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How Does Life Insurance Work?

A life insurance policy is a contract between you and a life insurance company that provides a cash benefit in the event of your death. Aside from certain exceptions, if you die while your policy is in force, your insurer will pay out a death benefit to your beneficiaries.

The main point of life insurance is to provide financial support to your beneficiaries when you die. You may have a need for life insurance if:

  • You’re married
  • You have children who depend on your income
  • You care for another person
  • You’re looking to plan your estate

Types of Life Insurance

The main types of life insurance are term life insurance and permanent life insurance.

Term Life Insurance

With term life insurance, you secure a policy that remains in force for a set amount of time (typically between five and 30 years).

Term policies enable you to secure coverage during crucial times in your life, such as when you're building a family, starting a business or caring for elderly parents. Term life insurance is often more affordable than permanent life insurance, especially if you only need coverage for this set period of time.

Many term life policies require you to pass a medical exam and answer a series of medical questions. An insurance company may take into consideration your age, medical history and current health and lifestyle when deciding whether or not to sell you a policy. These factors can raise your premiums if the company decides to offer you a policy.

Permanent Life Insurance

Permanent life insurance remains in effect for as long as you continue paying your premiums. Unlike term life insurance, it doesn't expire after a set amount of time. Permanent policies also build cash value over time.

Choosing a Policy

Finding the right life insurance policy for you will depend on numerous factors. A licensed life insurance agent can help match you with a policy that makes sense for your needs. 

To learn more about your life insurance options, speak with a licensed agent at 1-800-966-7169 or read through our guides below.


This is an advertisement for life insurance. 
Applications for life insurance may be subject to acceptance by insurer. Issuance of the policy may depend upon answers to health questions. Rates and coverage amounts depend upon the carrier selected. Your policy may be subject to underwriting approval. You will receive only the benefit amount in the policy issued.

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