Personal Finance Tip of the Week: Life Insurance

Life insurance is a protection against financial loss that would results from the premature death of the insured person. The beneficiary on the policy receives the proceeds and is safeguarded from the financial impact of the death of the insured person; this payment is known as a death benefit.

Term life insurance provides protection for a set period of time while permanent insurance, such as whole and universal life, provides lifetime coverage. The death benefits are generally tax free.

Insurance companies use rate classes (determined by a number of factors, including overall health, family medical history, and lifestyle) to determine your premium payments. Life insurance is usually chosen based on the needs and goals of the owner. So before your purchase a policy, consider your financial situation and standard of living you want to maintain for your survivors.