Life insurance is a contract in which an insurer pays a tax-free lump sum — the death benefit — to your named beneficiaries when you die, in exchange for regular premium payments. People purchase life insurance primarily to replace lost income for dependents, pay off debts and mortgages, cover final expenses, fund children’s education, or provide estate liquidity. If anyone depends financially on your income, or if your death would create financial hardship for others, life insurance is a foundational protection.