Life insurance is a financial tool designed to provide monetary benefits to designated beneficiaries upon the death of the insured. It serves as a safety net, helping to alleviate financial burdens that might arise due to loss of income, outstanding debts, and funeral expenses.

There are two primary types of life insurance: term life insurance and permanent life insurance.

1. Term Life Insurance: This type provides coverage for a specific period, typically ranging from 10 to 30 years. If the insured passes away during this term, the policy pays out a death benefit to the beneficiaries. If the term expires and the insured is still alive, the coverage ends, and there is typically no payout.

2. Permanent Life Insurance: This category includes various subtypes such as whole life, universal life, and variable life insurance. Permanent life insurance provides coverage for the lifetime of the insured, as long as the premiums are paid. Additionally, these policies often include a cash value component that can grow over time and be accessed during the insured's lifetime through loans or withdrawals.

When selecting a life insurance policy, it’s essential to consider factors such as the amount of coverage needed, the length of coverage desired, and your financial goals. Consulting with a financial advisor can help in determining the appropriate policy that fits your specific situation and requirements.

In summary, life insurance is a crucial component of financial planning that can offer peace of mind and financial security for loved ones in the event of an untimely death.