Life insurance is a contract between you and an insurance company. In simple terms, you pay the company a certain amount of money (called a premium), usually every month or year. In return, if you pass away, the company pays a lump sum of money (called a death benefit) to your chosen beneficiaries (usually your family or loved ones).
What Life Insurance Covers:
- Death from illness or natural causes (like cancer, heart attack, etc.)
- Accidental death (like a car crash)
- Some policies may include terminal illness coverage (pays out early if you’re diagnosed with a condition expected to cause death within a short time)
- Funeral costs and debts (your family can use the payout for these)