What is the purpose of life insurance?

The purpose of life insurance is to pay a death benefit to beneficiaries after the policyholder's death. This financial protection ensures that in the event of the policyholder's passing, their loved ones will receive a predetermined sum of money. This benefit can help replace lost income, cover ongoing living expenses, settle debts, or fund future goals such as education for children.

While options such as covering medical expenses or funeral expenses are important considerations, they do not encapsulate the primary function of life insurance, which is aimed at providing financial security to a family or dependents in the face of an unexpected loss of income. Accumulating savings may refer to certain types of life insurance products, such as whole life insurance or universal life insurance, but the main objective is still to provide a death benefit.