If “anyone” or “anything” relies on you financially, you need life insurance.
Life Insurance is defined as the insurance that pays out a sum of money either on the death of the insured person or after a set period. That is, the Insurer promises to pay the Insured’s designated Beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of the Insured person (often the policy holder). Depending on the contract, other events such as terminal illness or critical illness can also trigger payment.
The policy holder typically pays a premium, either regularly or as one lump sum. Other expenses (such as funeral expenses) can also be included in the benefits.
With reference to Wikipedia, Life-based contracts tend to fall into two major categories:
- Protection policies – designed to provide a benefit, typically a lump sum payment, in the event of a specified occurrence. A common form – more common in years past – of a protection policy design is term insurance.
- Investment policies – the main objective of these policies is to facilitate the growth of capital by regular or single premiums. Common forms (in the U.S.) are whole life, universal life, and variable life policies.