What Is Life Insurance and How Does It Work?

When you buy a life insurance policy, you become the policyholder who agrees to pay premiums to the insurer. The policy may cover a specific person; sometimes you, but it can also be someone else, like a spouse. If the insured person dies while the policy is active, the beneficiaries can file a claim with the insurer. The policy ends once the benefit is paid, or earlier if you stop paying premiums, in which case no money is refunded and no claim can be made.

Who Needs Life Insurance?

Life insurance can be valuable for anyone with financial responsibilities or loved ones who depend on them. Parents often use it to help provide for their children’s future, while homeowners may use it to cover a mortgage balance. Business owners can benefit by securing funds that keep their operations stable if something happens to them. Individuals without dependents may also find value in a policy to handle debts or final expenses, helping ease the burden on family members.

Types of Life Insurance Policies

Many types of life insurance are available, most of which fall under two main categories:

• Term life insurance may provide coverage for a specific period. Your beneficiaries may claim the death benefit if you die during the term.
• Permanent life insurance may remain active your entire life, if premiums are paid. It can also build cash value over time, which you can borrow against or use in other ways.

How Much Does a Policy Cost?

Insurers consider many factors when calculating premiums. This may include your age, health, lifestyle and the amount of coverage you choose. Term life policies usually cost less than permanent life policies. Speak to an insurance agent to help you find a policy that suits your budget and your family’s needs.

How Academy West Insurance Can Help

Our team can help you compare policies, discuss coverage details and answer questions about California-specific rules or benefits. Contact us today.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.