What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection to beneficiaries upon the policyholder's death. This type of insurance ensures that, in the event of the policyholder's passing, their loved ones receive a financial payout, often referred to as a death benefit. This payout can help cover various expenses that may arise, such as funeral costs, outstanding debts, mortgage payments, and day-to-day living expenses, thus providing peace of mind and financial security for the beneficiaries left behind.

In contrast, accumulating savings for retirement is primarily the function of retirement accounts and investment vehicles, not life insurance. While some life insurance products have a cash value component that can serve as savings, the main focus remains on providing monetary support upon death. Paying for healthcare expenses during the insured's life pertains more to health insurance rather than life insurance, as health insurance is designed to cover medical costs. Lastly, liability coverage is typically associated with property and casualty insurance rather than life insurance, as it protects against claims resulting from injuries or damage to other people or property.