What is life insurance?

Life insurance in the USA is a financial contract that provides a lump-sum payment, known as the death benefit, to the beneficiaries of the insured individual upon their death. It serves as a safety net to protect loved ones from financial hardships resulting from the insured’s passing.

There are various types of life insurance policies, with the two primary categories being term life insurance and whole life insurance. Term life insurance provides coverage for a specified term, typically 10, 20, or 30 years, offering a lower premium cost. Whole life insurance, on the other hand, covers the insured’s entire lifetime and includes a cash value component that can grow over time. Premiums for whole life insurance are generally higher. To secure a life insurance policy, applicants must undergo a medical examination and provide detailed information about their health, lifestyle, and financial situation. The premium amount is determined based on factors like age, health, and coverage amount. Life insurance plays a crucial role in ensuring financial security and peace of mind for American families.

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