Financial Facts Friday: How does life insurance work?

Financial Facts Friday: How does life insurance work?

Policy owner: the person who PAYS for the policy.
Insured: the person COVERED by the policy.
Beneficiary: the person who receives the death benefit.
Death benefit: the life insurance pay out (paid to beneficiary upon the insured’s passing).

The basic concept is very simple! Here is a really (really, really!) simplified breakdown of how it works.
1. Find a life insurance provider.
2. Choose a type of life insurance.
3. Select your beneficiary.
4. Pay the life insurance company for coverage. The most common payments are made monthly or annually.
5. If you pass away within the period of time that the policy covers, your beneficiary will receive a death benefit pay out!
6. If you pass away outside of the period of time the life insurance policy covers, your beneficiary will NOT receive the death benefit.

Next week, we will talk about WHO needs life insurance!

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