What is the primary purpose of a life insurance policy?

The primary purpose of a life insurance policy is to provide financial protection to beneficiaries. When the insured person passes away, the policy pays out a death benefit to the designated beneficiaries, ensuring that they have financial support during a difficult time. This can help cover various expenses, such as outstanding debts, daily living costs, and education expenses, thereby offering peace of mind that loved ones will be taken care of financially.

While some life insurance policies may have elements that serve as investment vehicles or accumulate cash value, these are secondary features and not the main focus of life insurance. Similarly, creating a savings account is not the intention of a life insurance policy, and while it can assist in covering funeral expenses, the broader goal is to ensure comprehensive financial protection for beneficiaries against the financial impact of the insured's death.