Money can help get through the time you need to get back on your knees. I've had the misfortune of having my cofounder die after 18 month and two investments rounds and some money would have really help.
Also you have to prepare for this kind of problems in advance because all of a sudden a substantial part of the shares of the company will be in limbo until the legalities are handled (and it can really stink if the family of the deceased is not helping...) which means: you can't raise money anymore, you can't really hire someone good as most people are very afraid of this kind of situation.
I couldn't imagine any small company who didn't have life insurance on its owners - I thought that was like one of the first things you did. Guess it gets overlooked.