What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection for beneficiaries upon the insured's death. This core function is designed to offer peace of mind and financial stability to the loved ones left behind, ensuring they have financial support to cover expenses such as debts, funeral costs, and ongoing living expenses. Life insurance is fundamentally about protecting against the financial risk associated with the untimely death of a breadwinner or key person in a family or business.

While investment and savings options can be associated with certain types of life insurance, such as whole life or universal life policies, these are secondary benefits that vary among policy types and are not the primary reason most individuals purchase life insurance. The main focus remains on the death benefit that helps beneficiaries manage financially after a loss. Additionally, while policyholders may indeed benefit from tax advantages related to life insurance, such as the tax-free nature of death benefits, this aspect is also not the primary purpose of such policies.