Life Insurance

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DEFINITION of 'Life Insurance'

A protection against the loss of income that would result if the insured passed away. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured.

INVESTOPEDIA EXPLAINS 'Life Insurance'

The goal of life insurance is to provide a measure of financial security for your family after you die. So, before purchasing a life insurance policy, you should consider your financial situation and the standard of living you want to maintain for your dependents or survivors. For example, who will be responsible for your funeral costs and final medical bills? Would your family have to relocate? Will there be adequate funds for future or ongoing expenses such as daycare, mortgage payments and college? It is prudent to re-evaluate your life insurance policies annually or when you experience a major life event like marriage, divorce, the birth or adoption of a child, or purchase of a major item such as a house or business.

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RELATED FAQS
  1. What are the restrictions for naming a given individual as my contingent beneficiary?

    Life insurance is an important part of estate planning. It allows you to ensure that you can financially take care of the ... Read Full Answer >>
  2. What is the difference between the death benefit and cash value of an insurance policy?

    One of the most utilized tools in funding an estate plan is term or permanent life insurance. Purchasing a life insurance ... Read Full Answer >>
  3. How do I determine the face value of a life insurance policy?

    For any life insurance policy, the face value is the death benefit. This is the stated dollar amount that the policy's beneficiaries ... Read Full Answer >>
  4. How much life insurance is enough?

    There are many factors to consider when calculating life insurance. Some of those factors include marital status, dependents, ... Read Full Answer >>
  5. What's the difference between casualty insurance and disability insurance?

    Casualty insurance is often called "property casualty insurance", and it provides insurance protection for your property ... Read Full Answer >>
  6. What is term insurance?

    Term insurance is a type of life insurance policy that provides coverage for a certain period of time, or a specified "term" ... Read Full Answer >>
  7. What is the difference between term and universal life insurance?

    Term life insurance is the most basic of insurance policies. It is nothing more than an insurance policy that provides protection ... Read Full Answer >>
  8. What is variable life insurance?

    Variable life insurance is a permanent life insurance policy with an investment component. The policy has a cash value account, ... Read Full Answer >>
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