Life insurance is a legal contract between an insurance company and a policy owner and is governed by state law. Under the terms of the policy contract, the policy owner pays premiums in exchange for the promise of payment of a specified amount of money to a named beneficiary when the insured dies. The policy itself contains provisions specifying the rights and obligations of the parties under the contract. The specific purpose of life insurance is to replace the economic loss resulting from a person’s death using money from a pool of funds to which many people contributed a relatively small amount.

You know that you need life insurance. However, with the wide variety of insurance policies available, you may find choosing the right one difficult. It’s really not as confusing as it seems, however, once you understand the basic types of life insurance policies.