Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an 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.
Basically, there are two types of life insurance: one that lasts for a set number of years (term life insurance), and one that lasts through your entire life (permanent life insurance).
Term Life Insurance provides coverage for a specific amount of time. If you pass away at any time during this term, your beneficiaries will receive the death benefit from the policy.
A term life plan is more affordable than a permanent plan because it has a simple goal of paying out a death benefit.
Permanent Life Insurance lasts throughout your entire lifetime. It comes in the form of whole life, universal life or variable life insurance, each differing slightly from the other.