A contract in which an insurance company agrees to pay money to a designated beneficiary upon the death of the policyholder. In exchange, the policyholder pays a regularly scheduled fee, known as the insurance premiums. The purpose of life insurance is to provide financial support to those who survive the policyholder, such as family members or business partners. When the policyholder dies, the insurance proceeds pass to the beneficiaries free of probate, though they are counted for federal estate tax purposes. There are many types of life insurance, including: term life insurance, whole life insurance, and universal life insurance.