Life insurance serves as a mutual agreement between the policyholder (you) and an insurance company. You will pay the company regular premium payments and in return, they will provide your beneficiaries with a death benefit after you have passed.

But, what are beneficiaries and what is a death benefit?

Well, a death benefit is the coverage amount that can be used to cover your funeral expenses, medical bills, and any other costs that might come up or already existed before or after your death. This death benefit will be paid to your beneficiaries, which are individuals that you want the death benefit to go to. This can be your family or friends, and you can choose just a single person or multiple people to get this coverage amount.

Your beneficiaries can also use the death benefit for what they feel is necessary. This can mean their own personal bills, student loans, or even for a vacation.