Is it as simple as person x gives money to some company to be spent a certain way after person x dies? How is that any different from a will? etc..
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All insurance is designed to offset a *loss*. If my house burns down the insurance replaces my house. If my car crashes insurance gets me another car. What you do with the money is up to you. If my car crashes I don’t *have* to spend the money on a new car, I can just pocket the amount and take the bus. It’s just an agreement give me $X if my *thing* is lost.
Life insurance exists to cover the *loss* of the benefit of the earnings of the deceased.
For example, say I’m the sole breadwinner in my home, I have a spouse and 2 children. My future earnings are going to cover things like paying off my mortgage, getting my kids through college, paying for their weddings etc.
So I’m 30 I probably want a lot of insurance to cover those events (all the years of earnings I’m not getting).
If I’m 80 I probably don’t need much/any insurance because what I’m paying for? The house is paid off, the kids are through school, married, have their own problems, etc.
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