{"id":4476,"date":"2020-09-22T21:00:00","date_gmt":"2020-09-22T21:00:00","guid":{"rendered":"https:\/\/www.freeway.com\/knowledge-center\/?p=4476"},"modified":"2025-05-03T01:22:51","modified_gmt":"2025-05-03T01:22:51","slug":"how-does-life-insurance-work","status":"publish","type":"post","link":"https:\/\/www.freeway.com\/knowledge-center\/life-insurance\/understanding-life-insurance\/how-does-life-insurance-work\/","title":{"rendered":"What Is Life Insurance and How Does it Work?"},"content":{"rendered":"\n

If you want to protect your family’s financial future, you need to consider buying a life<\/a> <\/a>insurance<\/a> policy. Still, you might find yourself asking, “What is life insurance, and how does it work?” Let’s take a closer look at it so you’ll see why it’s so important to have.\u00a0<\/p>\n\n\n\n

Life Insurance in Simple Words<\/h2>\n\n\n\n

Life insurance can be confusing, so let’s start by looking at it in simple words: it’s a contract between a policyholder and the insurer. As part of the agreement, the policyholder pays the insurance premiums.<\/p>\n\n\n\n

If the policyholder passes away while the contract is active, the insurer pays the death benefit. The beneficiary can use the death benefit for anything he or she wishes, from paying for college expenses to buying a new home or vehicle. The death benefit can also cover living expenses so the beneficiary can maintain the same lifestyle after the policyholder passes away. <\/p>\n\n\n\n

What Are the 4 Types of Life Insurance?<\/h2>\n\n\n\n

Policies can be broken down into four categories. You can purchase:<\/p>\n\n\n\n