A life insurance policy is a contract between an insurance company and a policyholder, in which the insurer agrees to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of the insured person.
There are two primary types of life insurance: term life insurance and whole life insurance.
Term life insurance is a life insurance policy that provides coverage for a specific period of time, such as 10, 20, or 30 years. If the policyholder dies during the term, the death benefit will be paid to the beneficiary. If the policyholder does not die during the term, the policy will expire and no death benefit will be paid.
Whole life insurance is a life insurance policy that remains in force for the whole life of the insured person, provided that premiums are paid. Whole life insurance policies typically have a cash value component, which grows over time and can be used by the policyholder during their lifetime.