What is life insurance?

Life insurance may be among the most straightforward forms of insurance.

It is simple in that the insurance covers a single risk – that you might die – and pays out to your designated beneficiaries a lump sum payment in the event of your death.

In its most common form, the insurance covers a defined period of time and pays out only in the event of your death within that period. If you survive that period, no benefit is payable. This is called term life insurance.