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. This means that when the policyholder passes away, the life insurance policy pays out a death benefit to designated beneficiaries, such as family members or loved ones. This benefit is designed to help cover various financial needs that may arise after the policyholder's death, such as paying off debts, covering daily living expenses, or ensuring that children are provided for.

While life insurance may have other features or benefits, such as accumulating cash value in certain types of policies, the fundamental and most critical purpose is to offer financial support and security to the individuals left behind. This distinguishes it clearly from other options like accumulating savings for retirement or covering medical expenses, which are not its primary functions. The focus remains on the financial safety net that life insurance provides during times of loss.