Death Benefit

• The death benefit of the policy is the amount of money that is paid out when you die. The death benefit normally represents a large sum of money relative to the cost associated with buying the policy. Your death benefit is claimed by a beneficiary. The beneficiary is the individual or organization that makes a death claim and supplies the insurance company with the necessary paperwork to prove death as well as prove that they are entitled to the benefit.
  
  

Premium

• The premium is the amount of money paid every month, every three months or paid annually to keep the life insurance policy in-force. Only a policy which is in-force will pay a claim. Policies that terminate due to non-payment of premiums are called "lapsed" policies.
  
  

Types

• There are many types of life insurance policies, but they can generally be narrowed down to either term life insurance or permanent life insurance. Term life insurance provides death benefit coverage for a set period of time ranging from one to 30 years. Permanent life insurance provides life insurance death benefits that are scheduled to last until your age 100 or 120, depending on the specific contract. A permanent policy also may provide an equity value, similar to how your home builds an equity value, over time. This equity value is an actual cash reserve that consists of money that the policy has earned through the payment of premiums. The premiums are invested and earn interest. The cash value is comprised of those premium payments plus interest. In some policies, this money may be withdrawn either partially or wholly. In all permanent policies with cash value, you may borrow against the policy's cash value for any reason during your lifetime. In general, term life insurance policies provide lower premiums in relation to the death benefit being purchased, but the death benefit is only temporary (it lasts only for the length of the term). Permanent life insurance provides a permanent death benefit, along with a cash savings, but at a higher premium.
  
  

Consideration

• Before choosing a life insurance policy, recognize that all policies pay a death benefit. What drives your specific policy choice will be your financial goals. Term life insurance will be ideal if you only need to insure your life for a set number of years. If you need or want your death benefit to be carried over into your old age, a permanent policy will be ideal.