Now, when your iPhone is connected to Wi-Fi, is being charged and is locked, it’ll save an exact replica of your current phone to the cloud.

That means, if you happen to lose your iPhone and get a new one, you’ll only have to log in and select one of your backups to get right back where you were the moment your iPhone was lost.

Note that you get only 5GB of free iCloud storage, which is enough for people who aren’t storing that many pictures and messages in the cloud. If you need more, like me, you can upgrade by going to Settings > iCloud > Change Storage Plan. I pay $2.99 per month for 200GB, which is reasonable.

Source: Tech CNBC
If you lose your iPhone, you don't have to lose all your photos and contacts with it