A life insurance policy is a contract with an insurance company in exchange for a monthly value called a premium. The insurance company provides beneficiaries, a lump sum payment known as the death benefit upon the death of the insured.
There are many varieties of life insurance, some can be for a fixed term and others can be for life, offering additional benefits such as, living benefits, and / or savings plans for the future. It is important to note that death benefits are generally free of income tax.