The contract is a promise to you. That if you die, the insurance company will pay a designated amount of money to a person you name as your beneficiary, as long as your policy is in force. Life insurance helps financially to protect your loved ones in case of your untimely death. Most life insurances are a variation or combination of two basic types of life insurance - Permanent insurance and Term insurance. When you set up a life insurance policy, you must name a beneficiary.
Most people name their spouse, children, or a close relative.
You may also specify in your policy how you want the benefits to be divided among your beneficiaries. You may choose the way in which this money will be paid out or elect to have your beneficiaries determine this when the benefits become payable. If you retain complete ownership of the policy, you may change the beneficiary as often as you wish. If the last named beneficiary of your life insurance policy were not living at the time of your death, the benefits of your policy would go into your estate. These benefits would then be distributed according to your will or to state laws if you did not have a will.