How Does Life Insurance Work? 
Video Transcript : Today 's question is , How does life insurance work ? Well , life insurance indemnifies or protects , or covers your liabilities . Let 's say you have indebtedness . Most people have a mortgage , and especially most mortgages today are dependent on two incomes . You 'd want to be able to cover both people that are involved in the mortgage so that if somebody died , they 'd be able to pay off their mortgage . But , not only that , you 'd want to be able to pay off all your credit cards , any other indebtedness you have and put money aside , bought through the death benefit for future obligations that you might have . Like for example , college education , or the retirement of the surviving spouse . These are areas where insurance indemnifies you from financial loss and gives your beneficiaries , usually , tax free benefits if something happens to you . 