insurance

life insurance

A contract paying a sum of money to designated beneficiaries upon the insured person's death.

Example

“The life insurance policy provided $500,000 to his family ensuring the mortgage would be paid.”

Memory Tip

LIFE INSURANCE — financial protection for the people who depend on your income.

Why It Matters

Life insurance provides financial security for your family after you pass away, ensuring they can cover expenses like mortgages, debts, and living costs without financial hardship. Understanding life insurance options helps you choose appropriate coverage that protects your loved ones while fitting your budget.

Common Misconception

Many people believe life insurance is only for wealthy individuals or those with dependents, but it can be valuable for anyone with financial obligations or people who rely on their income. Even young and healthy people can benefit from affordable policies that protect against unexpected circumstances.

In Practice

A 35-year-old parent with a 20-year mortgage and two children might purchase a 20-year term life insurance policy with a 500,000 dollar death benefit for a monthly premium of 40 dollars. If they pass away, the insurance company pays the 500,000 dollars to their spouse, who can use those funds to pay off the mortgage and cover their children's education expenses.

Etymology

From Old English 'lif' meaning life plus Latin 'securus' meaning safe — securing financial safety after death.

Common Misspellings

life-insurancelife insurencelif insurance

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