Which of the following best describes the primary function of life insurance?

The primary function of life insurance is to provide a death benefit to beneficiaries upon the insured's passing. This means that when the policyholder dies, the insurance company pays a pre-determined amount of money to the beneficiaries named in the policy. This benefit can help the beneficiaries cover immediate expenses, such as funeral costs, and can also provide ongoing financial support to replace lost income or fulfill long-term financial obligations, such as mortgage payments or children's education. By serving this critical role, life insurance aims to provide financial security and peace of mind to families in the event of an untimely death, ensuring that loved ones are financially supported when they are most vulnerable.

Other options may also have aspects relevant to financial planning; for instance, some life insurance policies can accumulate cash value over time, providing a potential savings component. However, this is typically secondary to the primary purpose of the policy, which is the death benefit. The options that suggest minimizing tax liabilities or serving purely as an investment vehicle do not encapsulate the fundamental goal of life insurance, which is primarily about ensuring financial protection for the insured's beneficiaries.