How does life insurance work?

Simply put, when a person buys life insurance, a certain amount of premiums is paid to the insurer for a specified period of time. In return, the insurer promises to pay the beneficiaries, usually the family of the insured, a specified amount equivalent to the value of the premiums paid when the insured dies or becomes disabled, depending on the kind of product that was bought. In all cases, before benefits are to be paid, the policy must be in force.

 

With this general concept in mind, life insurance companies have developed various products that address the different needs of a person and his family.