Life insurance

Life insuranceTermInsurance×التأمينA contract where you pay a regular fee to transfer the financial risk of a specific event to a company that agrees to cover the cost if it happens.Open the term is a contract between you and an insurance company. You pay premiums at regular intervals, and in return, the insurer agrees to pay a lump sum to people you name (your beneficiaries) if you die while the policyTermCar insurance×تأمين السياراتA contract that covers the cost of damage to your vehicle or injury to others, depending on the type of policy you hold.Open the term is active. The amount paid out is called the death benefit or sum assured, and it is set when you buy the policy.

There are two main types. Term life insurance covers you for a fixed period, typically 10 to 30 years, and pays out only if you die during that term. Whole life insurance covers you for your entire life and builds a cash value over time that you can borrow against or withdraw, though premiums are higher.

Life insurance protects the people who depend on your income. If you die, your family faces not only grief but the immediate loss of money you were bringing in. A mortgageTermMortgage×الرهن العقاريA loan secured by property, where the lender holds a claim on the house until the debt is repaid.Open the term still needs paying, children still need feeding, and a surviving spouse may not earn enough alone to cover both. Life insurance replaces that income for a defined period, giving your dependents time to adjust and to meet their obligations without selling assets or taking on debt.

The cost of access depends on your age, health, and the sum assured you choose. Premiums are lower when you buy young and in good health, and they lock in at that rate for the entire term. The death benefit arrives in the currency of the policy, typically the local currency where you live. Some policies also build a cash value that you own and can access, though this feature comes at a higher cost than pure term coverage.

• Life insurance pays out only if you die during the coverage period. If the policy expires and you are still alive, there is no payout, though some policies let you renew or convert to permanent coverage.
• The beneficiary receives the death benefit free of income tax in most jurisdictions, though this varies by country and by whether the policy is part of an estate.
• Insurers assess your health and lifestyle when you apply. Smokers, people with chronic illness, and those in high-risk occupations pay higher premiums or may be declined.
• The sum assured should cover your dependents' needs: outstanding debts, living expenses for a defined period, and any major costs like education. A common rule of thumb is five to ten times your annual income, though the right amount depends on your specific situation.