Many families nowadays rely on cash for day-to-day survival. As a result, untimely death in a family can result in a financial crisis in the household. Life insurance is one method of providing security if a family's income is lost due to death. A life insurance policy is an agreement between an insurance policyholder and an insurer in which the insurer is obliged to pay a sum of money to named beneficiaries upon the death of the policyholder.

The policyholder traditionally pays a premium, either on a regular or lump sum basis. The cost of insurance is calculated by actuaries using mortality tables. An actuary is a business professional who deals with uncertainty and risk measurement, and management. Other events, such as terminal illness or critical illness, may also cause payment depending on the agreement. Sometimes even funeral costs may be covered by the benefits.