A plain-English guide to understanding what life insurance is, how it works, and whether you might need it.
Life insurance is a contract where you pay a premium to an insurance company, and in return, the company promises to pay a lump sum of money to the people or entities you choose (your beneficiaries) if you pass away while the policy is active.
You generally need life insurance if someone else relies on your income or would inherit your debts. This usually includes:
Lasts for a specific "term" (like 10, 20, or 30 years). If you die during this term, it pays out. If you outlive the term, coverage ends.
Pros
Lasts your entire life as long as premiums are paid. Often includes a "cash value" savings component.
Pros