Life insurance is a contract between an individual and an insurance company. In exchange for regular premium payments, the insurance company provides a lump sum payment, known as a death benefit, to the designated beneficiaries upon the insured person’s death. The purpose of life insurance is to provide financial protection and support to the beneficiaries in the event of the insured person’s passing.

There are different types of life insurance policies available, including term life insurance and permanent life insurance. Here’s a brief overview of each:

1. Term Life Insurance: This type of policy provides coverage for a specific period, such as 10, 20, or 30 years. If the insured person dies within the term of the policy, the beneficiaries receive the death benefit. Term life insurance is generally more affordable but does not build cash value over time.

2. Permanent Life Insurance: This type of policy provides coverage for the entire lifetime of the insured person, as long as the premiums are paid. Permanent life insurance includes two main subtypes:

   a. Whole Life Insurance: It offers lifelong coverage and includes an investment component known as cash value. The policy accumulates cash value over time, which can be borrowed against or withdrawn by the policyholder. Whole life insurance tends to have higher premiums compared to term life insurance.

   b. Universal Life Insurance: This policy also provides lifelong coverage, but it offers more flexibility than whole life insurance. It allows the policyholder to adjust the death benefit and premium payments over time, within certain limits. Universal life insurance also builds cash value, which can be utilized during the policyholder’s lifetime.

The decision to purchase life insurance depends on various factors, including the individual’s financial obligations, dependents, and long-term goals. Life insurance can provide financial security for loved ones, covering expenses like mortgage payments, debts, education costs, and daily living expenses after the insured person’s death.

Before purchasing life insurance, it’s advisable to evaluate your needs, compare different policies from reputable insurance companies, and consider consulting with a financial advisor or insurance professional who can provide personalized guidance based on your specific circumstances.