Is life insurance to protect your life? No, life insurance will not protect your life, your family, your friend, and any human. There is no investment that can protect human life. Every people must be died at specified time even you cover yourself with steel shield.
The life insurance just protects the legacy or the people who suffer due to loss of someone. Sometimes a young father leaves the wife whose has no jobs or small kid. It is difficult to finance young kid who need money for school, food, and cloth while the kid cannot find the money and so the mother.
The insurance can enlighten the mother necessity. The mother can use the money for education, paying mortgage, daily necessity, and others. The mother can open the business with insurance money.
A person can buy the insurance to a life insurance company. He can make a contract with the company for specific term. The insurance may offer some term such as, 1, 5, 10, 20 years or etc. We can also renew the term if we select insurance with renewable option. The company, government, university, and municipal can also buy life insurance. In my country, a municipal also buy life insurance for the citizen. The legacy can claim the death of the citizen to the mayor.
People will pay some money to the company and the company will pay the claim someday. The company invests money to some investments such as stock, bond, ETF, mutual fund, bond, and more. The company will share the profit and gain from those investments to the insured person.
There are two types of life insurance:
Universal Life Insurance
If we use this insurance, we are free to set the policy amount and instruct the insurance to invest at stock, bond, or mutual fund. Certainly, the return of the insurance is different and depend on what investment that you have instruct to the insurance company.
With universal life, you can set the life insurance premium or life insurances rates. You have better fit the premium with your income. If you have high income, you can set the high premium and reversely.
Whole life Insurance
It provides an insurance that cover you entire life and you can cash money if you cancel the insurance. The company will pay your money and the return of investment. We can also borrow some money on this insurance too.
The question is do we need the insurance? Personally, I will not buy insurance. I prefer to invest money to stock, precious metal, and assets because it will give me more money than insurance.