What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection and support to beneficiaries in the event of the policyholder’s death. It aims to replace the lost income and cover various expenses that beneficiaries may face, such as mortgage payments, education costs, and everyday living expenses. This financial safety net can help families maintain their standard of living and manage financial obligations during a challenging time.

While other options may contain elements of truth, they do not encapsulate the fundamental intention of life insurance. Life insurance is not primarily designed to serve as an investment vehicle, although some policies may have cash value features that can be utilized as an investment over time. Additionally, while it can offer tax advantages, this is not its central function; the primary focus remains on protecting loved ones financially. Finally, limiting the purpose to just covering burial expenses undermines the broader coverage life insurance offers to address the financial impacts of losing a breadwinner.