Key takeaways
A life insurance policy pays a sum of money to your beneficiaries if you die while the policy is active.

There are two main types of policies: term and permanent.

You may be able to buy a life insurance policy that goes into effect instantly.

When you're shopping for the best life insurance policy for you and your family, there are important decisions to make. We'll show you how to choose the right type of policy and coverage amount, get life insurance quotes and find the best company for you.

Table of contents

What is a life insurance policy?
A life insurance policy is a contract between you and an insurance company. In exchange for regular payments, called premiums, the insurer pays out money after you die. This money goes to the people you choose as life insurance beneficiaries — usually children, a spouse or other family members.

Who needs life insurance?
A life insurance policy can be an important safety net if anyone depends on you financially. For example, if you’re the breadwinner, a parent, a homeowner or someone with co-signed debt, you may need life insurance coverage.

Beneficiaries can use the money for any purpose, such as repaying debts, replacing your income or covering your funeral and burial costs.

» MORE: 5 reasons to get life insurance

Key terms within this article

How to buy a life insurance policy
When you’re in the market for a life insurance policy, these are your options:

Online. Depending on the type of policy you want, you may be able to apply for and buy a policy online and get coverage on the same day. This is known as instant life insurance. Many insurers and brokerages use algorithms to determine whether you qualify for a policy, and ask a series of questions about your health and lifestyle to set your rate.

Through an agent or broker. If you’re a high-risk applicant or you simply want someone to help you navigate the buying process, you can go through a life insurance agent or broker. Captive agents sell policies from one company, like State Farm, while independent agents typically offer policies from multiple companies.

Directly from the insurer. Most insurers allow you to buy a policy through their site, over the phone or in person. Before committing to a company, be sure to compare quotes to make sure you’re getting the best possible coverage at the lowest possible price.

Which life insurance policy is right for me?
In general, there are two main types of life insurance: term and permanent. Term life policies cover you for only a set period of time, such as 10 or 20 years. Permanent life insurance can last your entire life and typically includes a cash value component.