<prompt> Human: Hi, personalfinance. Im 19 and submitted to this subreddit when I realized that the only way to get started with life on a good footing and be ahead of my peers was to get a sense of finance and how to budget and what all these terms mean. So Ive been lurking and picking up all the advice that people get here. My question is about life insurance: it seems to me that the only thing youre paying for with life insurance is for someone to hold onto your own money for you and eventually releasing less than youve paid into the policy to your beneficiaries. In other words, youre paying someone to do the equivalent of open a bank account with the label for my family after death. Do I have a wrong understanding of this? I suppose the bottom line is, if I could take the initiative and then stick to the commitment of allocating funds to do the same thing, so things like funeral arrangements and other bills and debts could be settled, do even need to think about life insurance?EDIT: Thanks everyone for the clarification; I misunderstood. Im understanding the logic now.  <response>: I understand your perception of life insurance, but youre thinking about it all wrong...Theres two main concepts about the product everyone needs to understand: 1 If you start paying for life insurance from your 20s till 90 years old, theres a fair chance that the money would have been better put in investments instead of an insurance policy actually, Im 100 positive it would be. HOWEVER, the purpose of life insurance isnt to secure a payout when youre in your 90s.. but instead insure against a pre-mature death in your 40s through 70s. In the case of an early death, the payout could possibly be much greater than the premium plus investment returns collected on the policy. 2 If you die early, or anytime before having a sufficient nest-egg saved up, you might not leave behind as much as needed for your loved ones. Im not just talking inheritances or charitable donations you want to make when you pass on, but things like supporting your kids through school or paying for a mortgage. If you have people dependent on your income, and you die, what will they do? This is where life insurance comes in... in case you die, your loved ones will be taken care of should you have savingsassets or not.Thats the basics of it... there are a few cases where someone might want to get life insurance outside of this, for instance: 1- Someone in deep debt that wants to pass along an inheritance since life insurance is not touchable by creditors, as the beneficiary is not the estate. 2- Someone who wants to insure a business partner, where the partners death might mean the end of their business. 3- Someone who is passing down a house to their kids but knows the tax burden on the kids for the value of the home will mean they probably will just have to sell it or take on debt just to keep the home. This extra insurance policy could help avoid tax headaches down the road.these were more strategic examples.. but many, many others existLong story short, at your age, unless youre married, own a home, or have kids hopefully the answer is no to all three, I wouldnt worry too much about life insurance. 