There are different types of life insurance coverage, but most life insurances have similar components to them. Life insurance is meant to cover your loved ones and dependents in the case of your death. It’s not something that anyone really wants to end up having to use, but it can put your mind at ease knowing that the people you care about will be covered in case something happens to you.

Components of Life Insurance

The most common components of life insurance are the policyholder, the beneficiary, the premium, and the death benefit. The policyholder is you, the person who owns the life insurance policy. The life insurance gets paid out to the beneficiary if the policyholder dies, and there can be more than one beneficiary. The premium is the money that is paid either monthly or annually to keep the policy active. The death benefit is the money that is paid out upon the death of the policyholder which goes to the beneficiaries. Most life insurances have these four components. However, certain types of life insurance differ.

Life insurance plans have different types of coverage. For example, some life insurance is term life insurance which lasts for a certain period of time and when the term is up the policy expires. With term life insurance the beneficiaries are only covered if the policyholder dies within that period of time. Permanent life insurance lasts as long as the premium is being paid. There is no expiration date to permanent life insurance which typically makes it more expensive than term life insurance. Within permanent life insurance there are different types such as whole, variable, and universal.

When shopping around for a life insurance plan it’s important to get quotes from many companies and ask a lot of questions. The more you know about life insurance and what you’re looking for, the better you will be able to understand the different coverage options and get the right plan for you.