Life insurance is a contract between an insurance policyholder and an insurance company, where the insurer agrees to pay a sum of money (death benefit) to the designated beneficiaries upon the insured person’s death.

1. Financial Protection: It provides financial security to the beneficiaries by replacing the income of the deceased and covering expenses.
2. Coverage Types: Whole life and term life are the main types, with whole life providing lifelong coverage and term life offering temporary coverage.
3. Premiums: The policyholder pays premiums regularly, which can be level or increase over time, depending on the policy type.
4. Death Benefit: The death benefit amount is determined when the policy is purchased and can be used by beneficiaries for various purposes.
5. Cash Value: Some policies, like whole life, accumulate cash value over time, which can be borrowed against or withdrawn.
6. Underwriting: Insurers evaluate the applicant’s age, health, lifestyle, and other factors to determine eligibility and premiums.

Life insurance acts as an essential financial planning tool, providing a safety net for loved ones by securing their future financial needs in the event of the policyholder’s untimely death.