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Life insurance is a type of insurance that pays out a death benefit to the beneficiary (the person who receives the life insurance money) in exchange for a premium payment (the amount you pay for life insurance). The purpose of life insurance is to help ensure that your loved ones will be taken care of financially if the unthinkable happens and you die. There are many different types of life coverage available, such as whole and part single-life policies, riders on your home or car policy, term lengths, annuities etc. Whole and Part Policies A whole life policy is much like a traditional life insurance policy. You pay a lifetime of premiums, and in exchange the company agrees to pay you a death benefit that is equal to your premiums upon your death. The amount you pay for your premium depends on the type of coverage you choose for your whole life policy. If you buy it in your 30s, for example, you will pay more than if you buy it in your 50s. A part life insurance policy is similar to a whole life insurance policy in that it pays out upon death, but the premium payments are more substantial initially because more coverage is needed up front (compared to a whole life policy).
