Life insurance provides the beneficiaries of a deceased person with a sum of money upon his or her death. The insured individual pays a premium according to the terms of the policy, after which the insurance provider is responsible for fulfilling its side of the bargain.
Why is Life Insurance Important?
Many people want to care for their loved ones after they pass on. When they lack the financial ability to leave a large sum of money for heirs, they can take out a life insurance policy.
Life insurance can pay for the final arrangements for the deceased person or fund the expenses of beneficiaries, such as school, medical bills, and more. In most cases, the beneficiary can use the life insurance payout however he or she wishes.
If you're ready to purchase life insurance, sign up for Mint to use the Life Insurance Wizard.
How Does Life Insurance Work?
The insured individual purchases a life insurance premium from a carrier. He or she pays the agreed-upon premium on a monthly, quarterly, or semi-annual basis for the life of the policy.
When the insured person passes away, the provider pays the amount of the policy to his or her beneficiaries. In some cases, the provider may impose limitations or restrictions based on the cause of death or other factors. For example, most life insurance policies do not cover deaths that result from suicide if the policy is fewer than two years old, according to Time.
Understanding life insurance helps you provide for your beneficiaries after you are gone.
Sign up for Mint to use the Life Insurance Wizard and other helpful tools.