You create a contract with an insurance carrier that is paid by a yearly or monthly premium. Premiums are based on the type of insurance you are obtaining and the statistical risks posed to the carrier (your age, career, medical conditions, etc).
This is because the death benefit (which is the total amount paid out by your life insurance company) can replace your income, pay for funeral costs and cover any debts that you may have by awarding these funds to your chosen beneficiary.
A beneficiary is the individual or individuals that you choose to receive the death benefit, such as a spouse or children. However, you can also designate this amount to anyone you’d like (including pets or charities).
If you want to have an added cash-value component to your policy to add to your financial portfolio and don’t mind spending more each month, then you might be a good candidate for whole life insurance.