What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection for beneficiaries upon the death of the insured. This form of insurance is fundamentally designed to ensure that in the event of the policyholder’s passing, their designated beneficiaries receive a death benefit, which can help cover expenses such as funeral costs, outstanding debts, and daily living expenses.

This financial support is particularly crucial for dependents or family members who may rely on the policyholder for their financial well-being. Life insurance aims to provide peace of mind, knowing that loved ones will not face financial hardship due to the unexpected loss of the insured individual. In addition, life insurance can also play a role in estate planning, aiding in wealth transfer, and ensuring that heirs are adequately taken care of.

While life insurance can sometimes be associated with investment opportunities or serve ancillary functions like covering debts, its core mission remains centered on providing a safety net for survivors in the event of a policyholder's death.