Life insurance is a contract with an insurance company that pays a death benefit to your chosen beneficiaries when you pass away, in exchange for premiums you pay while you're alive. The payout is designed to help your loved ones cover expenses you'd otherwise leave behind, things like lost income, a mortgage, childcare, or final expenses. There are two broad categories to choose from: term life insurance, which covers you for a set number of years and is generally the more affordable option, and permanent life insurance, which lasts your whole life and can build cash value over time.

Within permanent coverage, you'll find variations like whole, universal, and variable life insurance, each with different rules around cost, flexibility, and growth potential. Choosing the right type and amount usually comes down to your budget, how long you need coverage, and whether you want the policy to double as a savings or investment vehicle.