Typically, you work with an insurer to determine your exact needs. Often, a third-party administrator your insurer contracts will conduct an exam on you, after which you choose your life insurance policy based on your rates.
The amount of life insurance you purchase is entirely up to you. Many people tie the value of their life insurance policies to the value of their debts, such as mortgages or car payments. If you die while these debts are outstanding, your beneficiary can use the money to settle these expenses.
Other people choose to tie their death benefit to their income and leave a certain number of years’ worth of their paycheck to their survivors.
Upon your death, a specific amount of money, commonly known as a death benefit, is given to the person or people you have chosen. They can use this money for whatever they need.