How Life Insurance Works
Life insurance is basically an agreement between the insured party and the insurance company that pays out if the insured party dies. It’s a concept that requires full understanding in order to apply and claim. Let’s dig deeper into how this system is profitable for insurance companies.
Firstly, where does the insurance money go? The insurance money generally goes to a relative or beneficiary. This all depends on the specifications of the contract, but it’s on a case-by-case basis. There are two types of this insurance that should be understood: Term life and permanent life.
Term life insurance will cover the insurance holder for a pre-established window of time. This could range from 15 years and extend all the way out to 30 years. If the policyholder does not die after the term ends, they nor their beneficiaries receive any money.
Permanent life insurance, as its name implies, is guaranteed for the insured’s entire lifespan. The plan will pay out in the event that the policyholder is still paying premiums at the time of death. Companies make their money from those who do not pay their premiums.
That was a small tidbit of info on life insurance. For more information on insurance rates and specific legalities, check the video we have linked above.