What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection to beneficiaries upon the death of the insured. This means that when the policyholder passes away, the life insurance policy pays out a death benefit to designated beneficiaries, ensuring that they have financial support during a vulnerable time. This protection can help cover living expenses, funeral costs, and any outstanding debts, ensuring that the financial stability of loved ones is maintained after the loss of the insured.

While building cash value, accumulating wealth for retirement, and paying off debts during the policyholder's lifetime may be aspects of certain types of life insurance policies, they are not the fundamental reason for purchasing life insurance. The primary intent remains the provision of a financial safety net for beneficiaries, which underscores the importance of life insurance in estate planning and financial protection strategies.