What exactly does a Life Insurance Policy cover?
Answer:
It depends on the type of life insurance policy
you have and how much coverage you have purchased. For example, many life insurance policies cover the funeral expenses and pay off the mortgage as well as provide your survivors with income to cover their monthly living expenses. In some cases, you don’t even have to die in order to receive benefits (such as policies with a cash value).

Other types of life insurance cover specific situations. For example, a company can take out life insurance on key employees to cover the costs of replacing this person should they die or cover their losses due to the death. A credit life insurance policy is a life insurance policy that covers the cost of repaying a debt should the borrower die before paying off the loan.

Term life insurance covers the insured and provides death benefits for a specific term. Once the term expires, the coverage ends.

In addition, some life insurance policies have a dismemberment provision that covers the loss of a limb or eyesight. When the dismemberment or disability is proved, a benefit is paid out.
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