Life insurance is a contract between an individual (the policyholder) and an insurance company, where the insurance company agrees to pay a designated sum of money (the death benefit) to a designated beneficiary upon the death of the insured person. In return, the policyholder pays regular premiums to the insurance company.

There are several types of life insurance policies, but the two main categories are:

1. Term Life Insurance: Term life insurance provides coverage for a specified period, such as 10, 20, or 30 years. If the insured person passes away during the term of the policy, the death benefit is paid to the beneficiary. However, if the policyholder survives the term, the coverage expires, and there is no payout. Term life insurance is often more affordable than other types of life insurance and is suitable for individuals who want coverage for a specific period, such as when they have financial responsibilities like a mortgage or children's education.
2. Whole Life Insurance (Permanent Life Insurance): Whole life insurance, as the name suggests, provides coverage for the entire life of the insured person, as long as the premiums are paid. It combines a death benefit with a cash value component that grows over time. Part of the premium goes toward the insurance coverage, and the rest is invested by the insurance company. The policyholder can typically access the cash value through loans or withdrawals, but these may reduce the death benefit. Whole life insurance is more expensive than term life insurance but offers lifelong coverage and a savings component.

Other types of life insurance include:

1. Universal Life Insurance: Similar to whole life insurance, universal life insurance also offers a death benefit and a cash value component. It provides more flexibility in terms of premium payments and death benefit amounts.
2. Variable Life Insurance: This type of policy allows the policyholder to invest the cash value component in various investment options, such as stocks and bonds. The death benefit and cash value can fluctuate based on the performance of the underlying investments.