What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial security for dependents upon the policyholder's death. This type of insurance is designed to ensure that the financial obligations and needs of the deceased's loved ones are met, such as paying off debts, covering living expenses, and maintaining the standard of living for surviving family members. By doing so, life insurance helps reduce the financial burden on dependents during a particularly difficult time.

While accumulating wealth, covering funeral expenses, and funding retirement are financial goals that some individuals may consider, they do not encapsulate the primary intent of life insurance. Accumulating wealth typically relates to investment products rather than insurance, funeral expenses are just a part of the broader financial implications of one's death, and funding retirement usually involves different financial instruments. Thus, the focus of life insurance is distinctly on the immediate financial protection it offers to the dependents of the insured.