The Definition of Life Insurance Policy

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A life insurance policy is really a hedge bet against the unforeseen. Learn about the definition of a life insurance policy with help from a personal finance expert and professional in this free video clip.

Part of the Video Series: Personal Finance & Life Insurance
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Video Transcript

Hi, this is Walter Pardo. I'm Managing Director and Founder of Wealth Financial Partners and WFP Tax Partners in Basking Ridge, New Jersey. Today, we're going to discuss the definition of a life insurance policy. A life insurance policy is really a hedge against the unforeseen. So, you use life insurance simply to cover holes in your boat. You use it to cover a mortgage that you have, that if you should be out of the picture, you're not going to be able to pay. Your, they're to cover the expense for college for your two, in my case two kids, if I'm not around and I can't, I can't provide the tuition, my life insurance is there if I should pass away. So, it is a hedge against the unforeseen. Some people use life insurance as a mechanism of, of growing cash accumulation and borrowing from policies, tax exempt in some cases. But, really in its purest sense, life insurance is simply a hedge against what's unforeseen out there and making sure that if you're in a boat and there's a hole in the boat, you're able to plug that in with some money coming from life insurance proceeds.

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