What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection and support to beneficiaries upon the insured's death. This is fundamental to its design and function, as life insurance is intended to ensure that dependents or beneficiaries are financially secure in the event of the policyholder's passing. The payout, known as the death benefit, helps cover expenses such as funeral costs, debts, and ongoing living expenses for the beneficiaries, allowing them to maintain their standard of living despite the financial impact of the insured's death.

While some might see life insurance as a means to accumulate wealth or provide investment opportunities, that is not its primary role. There are other financial vehicles specifically designed for savings and investment purposes, such as retirement accounts and mutual funds. Life insurance, therefore, is primarily about risk management and providing a safety net for loved ones rather than serving as a direct investment or savings tool.