What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection to beneficiaries upon the death of the insured. Life insurance is designed to ensure that, in the event of the policyholder's death, their designated beneficiaries will receive a monetary benefit. This benefit can assist in covering immediate expenses such as funeral costs, outstanding debts, or replacing lost income, thereby helping the beneficiaries maintain their financial stability during an emotionally challenging time. This core function highlights the protective nature of life insurance, positioning it as a crucial component of personal financial planning.

While accumulating wealth for retirement, covering medical expenses, or serving as an investment vehicle are related concepts, they are secondary functions of certain types of insurance products or financial products and not the fundamental purpose of life insurance itself. Life insurance primarily centers on providing a safety net for loved ones, ensuring their ongoing financial support after the loss of the policyholder.