*Personal Financial Literacy Resource Guide*

In this chapter, we explain the meaning of life insurance; describe its purpose and principle.  We present the four general methods for determining the amount of life insurance needed.  Then we stress the importance of life insurance companies—mutual and stock—and distinguish between participating and non-participating life insurance policies.  Next, we describe types of life insurance policies—term life, whole life, limited payment life, adjustable life, and universal life are discussed in detail.  In addition, other types of life insurance policies; such as group life, credit life, and endowment life insurance are covered.  Next we focus on major and important provisions contained in a life insurance contract.  We emphasize the need for comparing insurance policy costs and examining a policy before and after the purchase.  Various settlement options are also presented in this section.  Finally, we conclude the chapter with a discussion on how annuities provide security to individuals.