What is the purpose of life insurance?

The purpose of life insurance is primarily to provide financial protection to beneficiaries upon the policyholder's death. When an individual purchases life insurance, they are essentially entering into a contract with the insurance company, which guarantees that a designated amount of money will be paid to the beneficiaries chosen by the policyholder. This payout can help cover various expenses, including mortgage payments, children's education, and daily living costs, thereby ensuring that the financial stability of the beneficiaries is maintained even after the policyholder is gone.

Life insurance serves as a safety net for families or dependents, enabling them to manage financial challenges resulting from the loss of income or support from the deceased. While there are different types of life insurance, some may include cash value accumulation, but this is not the primary purpose of purchasing life insurance. Instead, the core objective is to secure the financial future of loved ones in the event of an untimely death.