What is the primary function of life insurance?

The primary function of life insurance is to provide financial security for dependents upon the death of the policyholder. This financial protection is crucial for ensuring that loved ones are not left in a vulnerable situation following a loss. Life insurance serves as a safety net, helping to cover immediate expenses such as funeral costs, debts, and ongoing living expenses, which may significantly alleviate the financial burden that can accompany the death of a breadwinner.

While investment returns, medical expenses, and retirement funding are important aspects of financial planning, they do not directly constitute the fundamental purpose of life insurance. Investment returns are typically the domain of investment products, medical expenses are covered by health insurance, and retirement accounts are set up specifically for retirement needs. Life insurance, by contrast, is specifically designed to provide financial assistance to those left behind, ensuring that they maintain their quality of life even in the absence of the deceased's income.