What is the primary function of life insurance?

The primary function of life insurance is to pay beneficiaries a sum upon the insured's death. This financial protection serves to provide support to dependents or beneficiaries who may rely on the insured's income for their financial stability. In the event of the insured's passing, the policy's death benefit helps to cover various costs such as funeral expenses, outstanding debts, and everyday living expenses that the beneficiaries may face without the insured's financial contribution.

Life insurance is fundamentally designed to replace the loss of income that occurs when the insured dies. It ensures that loved ones are not left in a precarious financial situation during an already difficult time. This focus on providing a death benefit distinctly separates life insurance from other types of coverage, such as health insurance or investment vehicles, which serve different purposes entirely.