What Is Life Insurance?

Life insurance is a contract between you and an insurance company. In exchange for premium payments, the company pays a life insurance death benefit to your beneficiaries when you die. It typically covers both natural and accidental deaths.

Types of Life Insurance

1. Term Life Insurance: Provides coverage for a specific term (e.g., 10, 20, or 30 years). It’s straightforward and affordable but doesn’t build cash value.
2. Whole Life Insurance: Offers lifelong coverage with a cash value component. Premiums are higher, but it accumulates cash over time.
3. Universal Life Insurance: Combines life insurance with an investment component. It’s flexible but more complex.
4. Variable Universal Life Insurance (VUL): Allows investment in various funds within the policy. Cash value growth depends on market performance.
5. Indexed Universal Life Insurance (IUL): Tied to a stock market index. Cash value grows based on index performance.

How Does It Work?

1. Premium Payments: You pay regular premiums (monthly, quarterly, or annually).
2. Death Benefit: If you pass away while the policy is active and terms are met, your beneficiaries receive a lump sum called the death benefit.

Best Life Insurance Companies (June 2024)

• Pacific Life: Top-rated for variable universal life insurance (VUL) with competitive costs and reliable illustrations.
• Protective: Excellent for indexed universal life insurance (IUL) and strong financial strength.
• Corebridge Financial: Ideal for recreational marijuana users.
• Penn Mutual: Great for universal life insurance.
• Transamerica: Reliable policy illustrations.
• Symetra: Excellent for term life insurance.
• Lincoln Financial: Suitable for estate planning.
• Midland National: A good choice for seniors.
• MassMutual: Strong financial strength.
• Nationwide: Recommended for young adults.

For more details, you can explore the Forbes Advisor’s Best Life Insurance Companies and NerdWallet’s Life Insurance Guide articles. Remember to consult a financial advisor to find the best fit for your needs!