What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection to beneficiaries. When an individual with a life insurance policy passes away, the insurance company pays a death benefit to the designated beneficiaries. This benefit can be crucial for helping loved ones cover various expenses, such as mortgage payments, educational costs, and daily living expenses that may become burdensome in the absence of the income provided by the deceased.

While other options may have some relevance in broader financial planning, they do not capture the central role of life insurance. Accumulating savings typically pertains to investment accounts or savings vehicles, not life insurance. Minimizing tax liabilities can play a part in overall financial strategy, but it is not the main purpose of life insurance—such policies can have tax benefits, but that is incidental to their primary function. Covering regular living expenses is a concern that life insurance can address indirectly through the death benefit, but it is not the fundamental aim of purchasing a policy. Overall, life insurance is primarily about ensuring financial security for survivors in the event of the policyholder's untimely death.