Does Life Insurance really pay

Answer 1

Life insurance pays a stated amount of money upon the death of the insured. Payment is made if the policy was in force at the time of death and if the death was not the result of excluded causes.

Life insurance comes in two main varieties: term and whole life (sometimes called "permanent insurance"). Term is generally less costly because it provides "pure protection" during a fixed period of time (the "term", which may be 5,10,15, 20 years). The policy remains in force as long as premiums are paid and does not accumulate "cash value".

Whole life insurance also provides similar protection but does accumulate "cash value". The cash value aspect of whole life is somewhat like a savings account attached to the policy, and value accumulates slowly as premiums are paid. There are various kinds of whole life, including some that invest the cash value in mutual funds. Depending upon the performance of the savings element of the whole life policy, it can reach the point of supporting the policy such that no future premium payments have to be made.

Always bear in mind that life insurance should be considered protection, and never as an investment.