Term insurance is a contract between the insurance company & you. According to this contract, in case of your death, your family will receive a large cover amount. This cover amount is decided based on the yearly premium you pay & also many other factors. The reason you need to buy health insurance is because life is uncertain. You might be the sole breadwinner of the house. You might also have car, bike or home loans on you. In case, anything happens to you, term insurance will take care of your family financially, in your absence.