Life insurance is a way to secure the financial future of your family or business. There are different types of life insurance policies, but they all have one thing in common - payouts.
How does life insurance work?
As soon as you buy a policy and start paying insurance premiums, LICs agree to provide beneficiaries with a payment at the occurrence of an insured event. Policyholders choose their beneficiaries, who can be one or more individuals, a trust or even organization.
Some types of policies allow you to access a portion of your life insurance funds while you are still alive.
Life insurance benefit options
Lump sum payment allows a beneficiary to receive the entire death benefit at once; this is the most common form of claim payment. This payment is tax-free.
Deferred account or annuity allows beneficiaries to receive regular payments and accrued interest over a specified period of time. Since interest return is taxable, some people believe they are better off with a lump sum.
Types of life insurance
There are two main types of life insurance: term and permanent. Term life insurance policy provides financial security for a specified period of time. Permanent life insurance, such as whole or universal life, provides coverage throughout your life as long as your premiums are paid.
Source: https://money.com/life-insurance-beginners/
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