What is the primary purpose of life insurance?

The primary purpose of life insurance is to provide financial protection for dependents after the policyholder's death. This means that when the insured individual passes away, their beneficiaries receive a death benefit that helps cover living expenses, debts, and other financial needs that may arise in their absence. The intention is to replace the economic contribution of the deceased, ensuring that loved ones are not left in a vulnerable financial situation.

While the other options touch on important aspects of financial planning, they do not represent the main goal of life insurance. Accumulating savings for retirement and covering healthcare costs can be achieved through other financial products and services, like retirement accounts and health insurance, respectively. Likewise, while life insurance may have tax advantages, such as providing tax-free death benefits to beneficiaries, its fundamental purpose remains centered around protecting the financial security of those left behind.