subject: Life Insurance Questions And Answers [print this page] What is Life Insurance? Life insurance means that the insurance company will pay a certain amount of money to the beneficiaries when the insured person dies. This money that is paid to the beneficiaries upon the death of the person who was insured is called a "face value" or a "death benefit".
What is a life insurance beneficiary? The beneficiary or beneficiaries of a life insurance policy is the person or persons who are named in the life insurance policy coverage as the person or persons who will receive the life insurance face value/death benefit upon the death of the insured.
How is life insurance money paid out? How is the face value or death benefit paid to the beneficiary? The life insurance coverage policy will usually state the options of how the money will be given to the beneficiaries, but there are two main ways and that is in one whole lump of money or the life insurance money or face value/death benefit can be paid in installments which means the money is paid out more gradually.
Who gets life insurance? Why should someone get life insurance? Usually someone who is a wage-earner who has dependents, usually children, would benefit from life insurance. The life insurance coverage would mean that, for example, in the case of the death of a father, the father's children and wife would have money to live off of either to take care of their basic needs until other arrangements can be made or depending on the face value of the life insurance, the life insurance coverage could be paid in installments to the children until they are old enough to care for themselves. You don't have to be a relative of the life insurance policy holder to receive the coverage. If the life insurance policy holder names you as the beneficiary, the life insurance money goes to you. This may be especially helpful if there is a close friend of a family who has agreed to care for a person's children if the children's parents have died. Then, the life insurance money may give a certain face value to that close friend on behalf of the children or to care for the money until the children are old enough to use the money, etc. There are several ways of writing up life insurance coverage and every life insurance policy can be personalized to list the beneficiaries that the insured chooses.
How else is life insurance money used? As well as caring for children or providing money for a surviving spouse and other family members after the insured has died, the life insurance money can go to pay off debts, medical expenses incurred before the death, funeral and burial expenses, taxes, etc. Another example of life insurance coverage purposes would be for a business to have a life insurance policy for a very important employee or business partner. If the business partner dies, then the life insurance coverage money is available to keep the business running. There are several ways of using life insurance money and several reasons for getting life insurance, but the main reason is to be a risk manager. In the case of death, life insurance coverage is there to provide money to help those surviving the death of the insured person. Life Insurance
by: Melany Vitela
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