How does life insurance work?

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140

Answer 1 · 2016-05-27 14:20:19

Affordableone Insurance LLC, Insurance Agency

@AffordableoneInsuranceLLC • 05/27/16 This answer was first published on 05/27/16. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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There are several types of life insurance and each has its own unique properties but the general principle is that you are insuring someoens life. When that life ends the insurance company pays the beneficiary the amount of the policy.

A good example is a family - dad, mom, some children. Dad and mom purchase a life insurance policy so that, should one of them die, there will be money that the remaining family can use to transition to a life without the parent or parents.

Answer 2 · 2016-05-28 12:15:08

William Kare, Life Insurance

@williamk33 • 05/28/16 This answer was first published on 05/28/16. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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Life insurance is a written contract between the owner of the life insurance policy and the insurance company.

The owner agrees to pay a premium to the insurance company in return for the insurance company pormising to pay out a death benefit upon the death of the insured person, subject to the terms and exclusions stated in the life insurance policy.

Answer 3 · 2016-05-27 21:52:59

John C Brandy, Financial Consultant (Hourly)

@brandyjc • 05/27/16 This answer was first published on 05/27/16. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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1. Term Life Insurance equals "rented protection". You buy this fairly cheap stuff to do basically the same thing as home and auto insurance, except that the insured thing is you. This is because your spouse/family/etc depends at least to some extent on your income and if you die that's the end of that. So, you buy enough insurance that if something happens you're covered for 6 times your income which if invested right replaces the lost income.

Oh, if no one depends on your income, no debts that would become debts of the estate, things like that, you may not need any insurance at all.

2. Permanent Life Insurance is aka Whole Life, Universal Life or Variable Universal Life. The point is to transfer money to the next generation outside your estate, so they don't have to pay estate tax on that amount. That's about the only reason to have it, oh, that and the tax-free retirement income you could have.

If you're interested, we should talk a bit (for free). I specialize in education and collaboration that includes the professional financial stuff done without the high cost. And I give customers the same professional tools that are usually limited to the yacht-owner crowd. Let me know!

How does life insurance work?

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