What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection upon death. This coverage ensures that in the event of the policyholder's death, the designated beneficiaries receive a sum of money, commonly referred to as the death benefit. This can help provide financial security during a challenging time, covering expenses such as funeral costs, outstanding debts, or ongoing living expenses for dependents.

While there are other aspects of insurance and financial planning that address medical expenses, property damage, or income replacement, life insurance is specifically designed to address the financial impact of losing a loved one. It focuses on providing a safety net to those left behind, ensuring they have the necessary resources to maintain their financial stability. This distinguishes life insurance from other types of insurance, emphasizing its essential role in risk management related to untimely death.