What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection to beneficiaries in case of the insured person's death. This financial support can help replace lost income, cover living expenses, and ensure that dependents are not left in a precarious financial situation after the death of a loved one. Life insurance is fundamentally designed to offer peace of mind, knowing that the policyholder's beneficiaries will receive a death benefit that can help them maintain their standard of living or cover significant expenses.

While life insurance can sometimes include investment aspects or serve as a savings tool, these are not its primary functions. Its core purpose revolves around offering a safety net for the insured's dependents, thus ensuring their financial stability during a challenging time. While paying for funeral expenses can be a consideration, life insurance is not limited to covering those costs alone; it encompasses broader financial safety for the beneficiaries.