Life insurance

Life insurance is a contract that pays designated beneficiaries a stated benefit when the insured person dies, usually in exchange for premiums.

Beneficiary: A person or organization designated to receive money or property under a legal arrangement. The policyholder names who receives the death benefit.
Term life insurance: Life insurance providing coverage for a specified period, usually without a savings component. It offers death protection for a chosen term, typically at lower initial premiums.
Mortgage life insurance: Life insurance designed to pay down or repay a mortgage if the insured borrower dies. It targets the household’s largest debt, though proceeds may go directly to the lender.
Life insurance trust: A trust that owns or receives life insurance proceeds according to its governing terms. Trust ownership can control distributions and affect estate planning.
Insurance: A contract that transfers specified financial risks to an insurer in exchange for payment. Life insurance is one form of risk transfer, focused on death-related financial loss.
Death benefit: The amount an insurance policy pays when a covered event occurs. This is the payment life insurance promises after the insured dies.
Whole life insurance: Permanent life insurance with level premiums and a policy cash value. It combines lifelong coverage with a guaranteed cash-value structure.
Key person insurance: Business-owned life insurance covering an employee whose death would cause significant financial loss. A company can use the benefit to manage disruption after a key employee dies.
Life insurance tax treatment: The rules determining how life insurance premiums, cash value, and death benefits are taxed. Tax treatment can change the net value delivered to beneficiaries.
Actuarial science: The use of mathematics and statistics to assess financial risk, especially in insurance and pensions. Insurers use mortality and financial models to price life coverage.

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