Life insurance provides ongoing income for a policyholder's family if he suddenly dies, according to The Motley Fool. In addition to replacing the deceased's income, life insurance can also cover funeral, legal and medical expenses that result from the policyholder's death.
Taking out a life insurance policy is a good idea for people who have spouses, children or dependents who rely on the head of the household or a primary caregiver to take care of them, explains The Motley Fool. Life insurance can also take care of future savings goals and acts as protection for a person with a complicated will or no will at all.
A single person or married couple without any children or dependents usually doesn't need very much insurance, states The Motley Fool. Money contributed to a savings fund may be enough on its own to take care of funeral costs.
A life insurance policyholder who is leaving a sizable estate should consider adding life insurance coverage that takes care of all estate taxes so the heirs don't have to pay them, according to The Motley Fool. Successful investors and people with large estates should discuss their special circumstances with an estate planning attorney and their insurance provider.