Insurance and Risk Management Life Insurance Could Help Your Estate Planning Taking out an insurance policy on your life can provide your heirs with the funds they need to pay the expenses of settling your estate without dipping into the assets. It may also help replace any income that your family may lose due to your death.A life insurance policy is one way to ensure that funds will be available to your heirs for immediate or long-term financial needs. If you are a small business owner, life insurance proceeds could help supply funding to pay estate taxes and administration expenses. You can also use this funding for a buy-sell agreement for the purchase of your business interests by stockholders, partners, or corporations. This will help eliminate the possibility that the business will have to be sold to meet the obligations.