What Is Life Insurance & How Exactly Does It Work?

We all know that life is not certain, right? In such situations, it becomes essential to have something for the safety of our loved ones. Life insurance is that one thing that is like a safety net for your family if something unexpected happens to you. It can give you peace of mind and make you feel secure about your financial future.

Discussing life insurance might be challenging. It is not an easy thing to discuss. However, one thing is for sure. You should have life insurance, like one from Lewis Insurance if you want something better for your loved ones. Let’s break down what exactly it is and how it works. If you are interested in knowing it, make sure to stick with us till the end. So, without any further ado, let’s dive into it!

What Is Life Insurance?

Before understanding how this type of insurance tends to work, it is essential to understand what it is. Well, when we talk about life insurance, we are referring to a special kind of insurance that steps in to help your chosen loved ones. It is usually your immediate family members.

All of it happens in situations where the policyholder passes away. The money that is provided through this insurance is very beneficial. It can be utilized for several different things.

These may include things such as medical bills, house payments, funerals, daily expenses, debts, and a lot of other things as well. What is most important to note here is that it gives your family and loved ones some breathing room during a tough time.

For example, if any unfortunate event happens and the policyholder leaves this world, the family members might not have to rush into selling their home or finding a new job.

The money from the insurance, like that from Lewis Insurance, can ease their worries associated with the money while they cope with the loss. That’s a great thing and can prove to be helpful.

Now that we understand what it is, let’s see how it works. Knowing the way it functions can help you decide whether it is right for you or not.

How Does Life Insurance Work?

Well, this type of insurance works in a pretty straightforward manner. Usually, what happens is that your insurance application first gets approved by the relevant authorities.

Once that is done, you work out the policy details with your insurance company. You make sure everything is up to the mark. This is crucial.

After that, you must pay a monthly or yearly fee called a premium. It is to keep your coverage going without any issues. Once your policy is in place, your agency or the company shouldn’t typically cancel it. It is even if your health changes over time while you’re still alive.

There can still be a few situations and circumstances where they might say no to a claim. This usually tends to happen in scenarios where an individual forgets to pay their premiums.

Not only that, but it can also happen if someone does not provide them with the right and most authentic health information.

There are certain cases where the insurers might have other exceptions. It can include situations such as if you pass away doing something risky or a beneficiary is involved in your death.

Therefore, if you want everything to work out smoothly and do not want any issues to occur in the future with your loved ones, you need to be very careful in this regard. You must keep up with your payments and be honest with your insurer.

Trust us when we say this: doing all of this and putting in such efforts will benefit your family a lot. It will ensure your loved ones get the support they need when the time comes.

Types of Life Insurance

When it comes to life insurance, as provided by renowned agencies like Lewis Insurance, there are mainly two types available. One is a term, while the other one is permanent.

You might be wondering if both have the same purpose or not. Well, yes, they both serve the same primary purpose: to help and support your family if something happens to you.

These come with something referred to as a “death benefit,” a guaranteed amount of money that goes to your loved ones when you pass away.

Also, it is essential to remember that this money that your close ones will receive might have to deal with taxes.

Now, if they both have the same purpose, what is the difference between the two?

Well, the simple answer is that the big difference between these two types is what they cover. Let’s understand it in a bit more detail.

Term Life Insurance

Do you have a rental car? If yes, then you can consider it like the term life insurance. It’s temporary, just for a specific amount of time.

Although temporary, it lets you choose how long you want it to last. 10, 20, or maybe 30. Whatever you prefer and also what the company offers.

It is crucial, however, that you know that if you pay your insurance bill on time, your family gets a guaranteed payment if something wrong happens to you during that rental period.

You know that, right? You may not know that if you’re still going strong when the policy’s time is up, there’s no payout.

But you don’t need to worry much. There is good news for you. Due to its temporary nature, the term life insurance usually doesn’t cost as much as the other type we’ll discuss next. That is fantastic, isn’t it?

Permanent Life Insurance

Permanent life insurance, as the name suggests, is like the long-lasting version. It is not like term insurance. It doesn’t have an expiration date. It’s there for your whole life. But here’s something you must know—it’s usually pricier, meaning you pay higher premiums.

What’s interesting about permanent life insurance that many individuals may not know is that it’s not just about the payout when you’re gone. It’s like a two-in-one deal.

You get the insurance part as usual. But there is something more that you get. It is the investment or saving part called “cash value.”

When you pay your premiums, some of that money goes into this pot. The fantastic thing is that any growth there doesn’t get taxed immediately. Brilliant, isn’t it? Sometimes, it can even boost the payout your loved ones get.

Now, there are different categories as well. Here are the common ones:

1. Whole life insurance: This one is more steady. It guarantees a certain amount of interest on your cash value. You will know that it’s growing at a set rate.

2. Universal life insurance: Here, part of your premiums gets invested in things like bonds and stocks. Interestingly, if those investments do well, they can help cover your premiums, whether it comes with a guaranteed payout depending on the specific policy. So you must know this before making a decision.

There is no denying that permanent life insurance is like a combo meal. You not only get insurance but a savings plan as well. It’s a bit pricier. Therefore, you need to weigh the costs and benefits.


We hope you got sufficient information to decide on the type of life insurance ideal. It is vital to choose the right and most trusted agency for this purpose, such as Lewis Insurance. Also, understand each type, analyze all the pros and cons, and then decide which is right for you.

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