You can buy different types of insurance policies that cover a range of risks, depending on what you are insuring.
Life Insurance
Life insurance was initially designed to protect the income of families if the head of household dies. Today, life insurance is used for many reasons, including wealth preservation and estate tax planning.
Life insurance provides a lump sum of money or a monthly income in case of the policyholder’s death before an agreed date. The funds of the policy will go to the policyholder's beneficiaries - usually the policyholder's family, or can be used to pay off certain large debts, such as a mortgage, or fulfill other economic goals (putting kids through college), leaving a charitable legacy, paying for funeral expenses, etc. Life insurance protection is also important if you are a business owner or a key person in someone else's business, and your death might cause financial losses.
Annuities are generally classified as insurance because they are issued by insurance companies, regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources.
Not everybody needs life insurance. If you are single and have no dependents, it may not be worth the expense.
Your need for life insurance will depend on your personal circumstances, including your current income, expenses, savings and your family's goals.
