Life Insurance

Life insurance provides compensation to specified individuals or groups—such as to family members or charities—when the policyholder dies. Some policies also provide funds for people to use during periods of their life when they will no longer be able to earn income through work, such as in the final stages of a terminal illness.

In industrialized countries such as the United States and Canada, most people must earn a living to provide for themselves and their families. When a wage-earning family member dies, remaining family members may not be able to meet financial obligations and goals. Life insurance allows people to use some of their earnings to assure that money will be available in the case of death. Individuals can purchase life insurance coverage individually from insurance companies. Others purchase coverage as part of a group, such as through their place of employment.

Some life insurance policies, known as term life, cover policyholders for set periods of time, or terms. Other policies, known as permanent life, cover policyholders for their entire lives.