What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection to beneficiaries in the event of the insured's death. Life insurance policies are designed to pay a predetermined amount, known as the death benefit, directly to the beneficiaries chosen by the policyholder. This benefit can help cover various expenses such as funeral costs, outstanding debts, mortgages, and daily living expenses, thereby ensuring that the loved ones left behind are financially secure in the absence of the insured.

While life insurance can sometimes serve as an investment vehicle or a way to accumulate cash value, these roles are secondary to its fundamental purpose of loss protection. Options that focus on investment returns, covering medical expenses, or accumulating savings for retirement do not accurately capture the essence of life insurance. The true core of a life insurance policy lies in its ability to provide support and financial stability to the family or dependents when they need it most following the death of the insured.