Overview
Life insurance is a standard type of insurance contract that pays out on the event of the death of the insured. It is generally used to ensure that ones loved ones will have money to live when the primary provider dies.
Types
- Term - is a insurance contract with a pre-specified term. That is, term insurance pays out if the holder dies prior to the end of the term.
- Renewable - is a term insurance policy that gives the holder the right to renew at the end of the term.
- Whole Life Insurance - is a policy that has no term, that is, it pays out whenever the holder dies.
Analytics
The basic framework for analyzing life insurance is survival analysis. It models the distribution of the amount of time till an event occurs.
Tax Treatment and Corporate Use
Investments in a life insurance policy are generally non-taxable. This is one of the primary reasons that company's choose to buy life insurance policies on their own employees, money in the policy will grow tax free. (Such policies are called corporate-owned life insurance, or COLI)