Life insurance provides protection and financial coverage to your loved ones in the case of loss of life. With a life insurance policy, the policyholder will pay premium payments (usually monthly or annually) to the insurer. In the case of their death, the insurer will pay a predetermined lump sum of money to the beneficiary (or beneficiaries) of the insurance plan. After the release of the funds, beneficiaries are then able to use the money as they wish, to cover costs from funeral expenses to monthly living expenses.