What is the primary purpose of a life insurance policy?

The primary purpose of a life insurance policy is to provide a financial benefit to beneficiaries upon the policyholder's death. This is a crucial function of life insurance, as it offers financial security to the policyholder's loved ones, helping them cover living expenses, pay off debts, or manage final expenses after the policyholder passes away.

Life insurance is fundamentally about transferring the risk of financial loss that comes with the premature death of an individual to the insurance company. The death benefit received by beneficiaries can be a crucial financial resource during a challenging time, ensuring that they are not left in financial distress due to loss of income or increased expenses.

In contrast, options focusing on health care expenses, property losses, or investment strategies do not accurately depict the primary function of life insurance, which is specifically aimed at providing death benefits rather than addressing health, property, or investment concerns.