A life insurance contract is a legally binding agreement in which one party (generally, a life insurance company) agrees to pay a certain sum of money to beneficiaries of the other party (generally, the policyholder) upon that party's death, or after they reach a specific age.
Typically, in order to agree to a life insurance contract, life insurance companies must have the promise of the policyholder to pay a certain amount of money in the form of premium payments. In most cases, the higher a person wants their life insurance benefit to be, the more they will have to pay in premiums. Life insurance payouts can often be quite substantial.
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