Life insurance is a contract between an insurance policyholder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period. Here are some key points to understand about life insurance:

• Purpose: Life insurance provides financial support to surviving dependents or other beneficiaries after the death of an insured policyholder. It can help cover lost income or pay off debt.

• Types: There are two basic types of life insurance plans: pure protection and protection and savings. Permanent life insurance provides coverage that lasts your entire life, while term life insurance provides coverage for a specific period of time.

• Premiums: Premiums are the payments made by the policyholder to the insurance company. For term life policies, these cover the cost of insurance and administrative costs. With a permanent policy, a portion of the premium payments is added to the cash value, which can earn interest.

• Beneficiaries: The person or people appointed by the policyholder to receive the benefits of the insurance policy in their absence are called the nominee or beneficiary.

Life insurance can be a prudent financial tool to provide protection for your loved ones in case of death while the policy is in force. However, its important to consider the following:

• Buying too much or insuring those whose income doesnt need to be replaced may not make sense.
• There are many different types of life insurance policies available in the market, so its important to understand how a life insurance policy works before choosing one.

In summary, life insurance is a contract between an insurance policyholder and an insurance company that provides financial support to surviving dependents or other beneficiaries after the death of an insured policyholder. It can be a useful financial tool to provide protection for your loved ones in case of death while the policy is in force.