A type of insurance which covers the life of a person is known as Life Insurance. It is a contract between an insured person and an insurance company which may either be a government agency or a private company.

According to this agreement, the insurance company agrees to pay a specific sum of money after the death of the person who is being insured. In return the person who purchases life insurance plan pays a premium at regular intervals of time.

In most cases, money is paid if insured events take place. By insured events it is meant that the death of the person who purchased the insurance is because of the events that have been specified in the contract. The most common type of insured event that is specified in a contract is serious illness.

Life insurance policies can be of different types. On the basis of the needs and requirements, a person can purchase the plan that appears to be the most feasible.

A term life insurance plan is also known as a temporary insurance plan. This plan is the simplest and easiest one which can be purchased for insuring the life of a person. This type of a plan is the one which covers the life of a person buying this plan only for a specific period of time. If the person for whom the insurance plan has been purchased for dies within the term of the plan, the insurance company pays the sum of money. However, if the term ends and the policy is not renewed, the cash benefits are not paid out.

A whole Life Insurance plan is the one which covers the insured person for his or her whole life. There is no fixed time for the policy to cease. When the person who holds the insurance policy dies, a specific sum of money is paid to the beneficiaries.

Term life insurance policy requires the policy holder to pay the same amount of premium as the cost of this policy is spread across several years. The cash benefit is paid in a lump sum as the cash get accrued over a long period of time.

Universal life insurance plan is the one which covers a person till his or her death. In universal insurance plans, the insurance amount is divided into death benefit and accrued cash. In this case, cash can be withdrawn as soon as cash value gets accumulated and so cash is not paid in a lump sum.

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