Life Insurance

Short answer: life insurance is a contract between you and an insurer where you pay regular premiums and, in return, the insurer pays a guaranteed sum of money (the death benefit) to your chosen beneficiaries if you die while the policy is in force. Many policies also offer living benefits (cash value, investment growth, loan options) depending on the type.

how it works from buying to claim

Decide how much coverage you need
- Estimate income replacement, debts, education costs, funeral costs, and any future obligations.
Choose a policy type and term
- Pick term for affordable, temporary coverage; pick a permanent policy if you want lifelong protection or an investment/cash-value feature.
Get quotes and compare insurers
- Compare premium cost, insurer rating, exclusions, riders (add-ons) and claim settlement history.
Apply / fill an application
- Provide personal info, health history, occupation, smoking status, lifestyle. Be honest — incorrect answers can void claims.
Underwriting & medical checks
- Insurer reviews application; may request medical exam, blood tests, medical records, or just accept via simplified issue (no exam) depending on policy.
Premium is set
- After underwriting, insurer sets your premium. You start paying (monthly, quarterly, yearly).
Policy delivered and in force
- Once the insurer issues the policy and you pay the first premium, the coverage begins (check for any contestability period—often 1–2 years—for misstatements).
Maintain the policy
- Keep paying premiums on time. For permanent policies you may be able to borrow against cash value or surrender for a cash payout (fees and tax consequences may apply).
If the insured dies while policy is active
- Beneficiaries file a claim with the insurer, submit required documents (death certificate, policy copy, ID, claim form).
Claim adjudication & payout

Insurer verifies details and pays the death benefit (usually as a lump sum; some policies offer annuity or installments). If fraud or material misrepresentation is found (especially during contestability period), claim may be denied.

Why people buy life insurance

Things to watch out for

Read exclusions and waiting/contestability periods.
Be truthful on the application — inaccuracies can deny claims.
Understand tax rules in your country (premiums or payouts may be taxable or tax-free depending on local law).
Compare financial strength and claim-paying reputation of insurers.