What is typically the main purpose of a life insurance policy?

The main purpose of a life insurance policy is to provide financial protection for beneficiaries upon the policyholder’s death. Life insurance is designed to pay out a predetermined sum of money, known as the death benefit, to designated beneficiaries when the insured individual passes away. This benefit can help cover expenses such as funeral costs, outstanding debts, and ongoing living expenses for family members, ensuring financial stability in a difficult time.

While accumulating savings for retirement, covering health care costs, or serving as a tax shelter may involve insurance products, these are not the primary focus of life insurance policies. The core intent remains centered on safeguarding the financial future of loved ones through death benefits.