Why Do People Obtain Life Insurance? 
People obtain life insurance for many reasons . Probably the most common one is to provide for their family if they should die while still having financial responsibilities that will be left to survivors to shoulder . Some people buy business insurance to cover their key employees , so that their business would not go under if their best performers died . Or an adult child might purchase business life insurance on the life of their parent , so that they have enough money to buy their share of the business from spouse , investors , or business partners , if their parent died . Life insurance can be used to provide money for estate settlement costs/taxes , to pay for final expenses such as funeral and travel for out-of-state/country family , to pay off a mortgage , or to provide collateral for a loan . The tax favorable status of life insurance , the advantage that the proceeds are paid quickly and usually bypass probate , and the fact that you can choose your own beneficiary , all contribute to the appeal of life insurance . 