There are several different types of insurance, such as home, auto, health and life insurance, and then there are several different types of life insurance to choose from. It can easily become confusing.

Usually, you are not required to obtain life insurance by law. This means it is up to each person to choose to purchase life insurance for him or herself. Most people searching for a policy usually make their decision based on the cost of life insurance. Before you make a final decision, you should know the basics.

Life Insurance

Life insurance is an investment that you make in your family. When you purchase a policy, you are generally entering into a contract with the insurance company. The contract basically means that if you pay a monthly fee, called a premium, and you pass away, the insurance company will typically pay the face value of your life insurance policy to your beneficiaries.

Who is Life Insurance For?

Anyone can purchase a life insurance policy. Usually, the head of the household or the person that brings in the largest income is the person who is insured. However, anyone, including children, can have a life insurance policy.

Types

People can purchase different types of policies. The most popular are usually term Life  or whole life insurance. Term life insurance is generally set for a certain length of time such as one, five, ten, twenty or thirty years. Whole life insurance usually covers the individual up to the age of 100.

Cost of Life Insurance

The cost of life insurance may depend upon several factors, including age, tobacco use, job, hobbies and your overall health. If you are looking for a low cost of insurance, it is generally a great idea to obtain rates from different insurance companies to compare. For more information, please read “Compare Term Life Insurance Rates to Get the Right Policy for you” <hyperlink: article>.