What is life insurance and how does it work?

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A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a Tax Free lump-sum payment, known as a death benefit, to beneficiaries upon the insured's death. Typically, life insurance is chosen based on the needs and goals of the owner.

Term Life Insurance
There are two basic types of term life insurance policies: level term and decreasing term. Level term means that the death benefit stays the same throughout the duration of the policy. Decreasing term means that the death benefit drops, usually in one-year increments, over the course of the policy's term. With both types you will have them for a specific time periods, Ex. 10, 20 or 30 years.

Whole Life Insurance
A form of permanent life insurance. Rather than pay premiums for a set number of years, you pay them for your whole life and when you die, your beneficiaries receive a Tax Free death benefit ... If you don't want to pay premiums forever, there is paid - up whole life insurance. These policies can also build cash value.

Universal Life Insurance
The insured is protected with a guaranteed amount of death benefit proceeds. In addition, funds that are in the policy’s savings component are invested to provide the policy holder with cash value build up. Over time, this cash can grow on a tax deferred basis.