What is the main purpose of life insurance?

The primary purpose of life insurance is to provide financial support to beneficiaries upon the insured's death. This financial support can cover various needs, including funeral expenses, outstanding debts, and the ongoing living expenses of dependents. By delivering a lump-sum payment or a series of payments to the beneficiaries, life insurance allows for a measure of financial security during what can be a challenging time following the loss of a loved one.

While life insurance can sometimes offer investment components, such as in whole or universal life policies, its main function is not to serve as an investment vehicle but rather to ensure that the policyholder’s loved ones are safeguarded financially. Additionally, life insurance does not primarily exist to cover medical expenses—such expenses are typically addressed through health insurance. Multi-policy discounts may be offered by insurers, but this is not the primary purpose of life insurance; rather, it is a marketing strategy to encourage policy bundling. Overall, life insurance remains fundamentally focused on financial protection for beneficiaries after the insured person passes away.