Life insurance is a type of insurance policy wherein the insurer agrees to pay a certain amount to the beneficiary in case the policy holder passes away or becomes critically ill or physically disabled. The beneficiary is designated by the policy holder upon taking out the life insurance policy. Other terms and conditions may apply, depending on the specific nature of the life insurance policy.
There are a lot of companies offering life insurance policies. The individual policies will differ depending on the company, the location, and the specific details that you require. Premiums, or regular payments, must be made. The amount and frequency of payments also differ depending on the total value of the life insurance policy. More so, the policy holder can also determine the payment frequency.
The question that remains to be answered is whether or not it is necessary for you to take out a life insurance policy. More often than not, the answer will depend on your personal circumstances. If you have people who are dependent on you financially, it is much better to take out a life insurance policy that will pay out a considerable amount in the event that you die. This will ensure that they will have income - even if temporarily - in case you are unable to provide for them.
As a matter of fact, even if you do not have people who are dependent on you for their income, taking out a life insurance policy is a good idea. In this case, a small coverage will suffice. This amount can take care of little things such as funeral expenses and minor debts. Doing so will take away the burden - from your surviving relatives or friends - of having to deal with your financial obligations.