What is the purpose of life insurance?

The purpose of life insurance is primarily to provide financial protection for beneficiaries upon the policyholder's death. This financial safety net ensures that loved ones are not left in a precarious financial situation in the event of the insured's passing. The proceeds from a life insurance policy can be used by beneficiaries to cover a variety of expenses, such as funeral costs, debts, and the ongoing living expenses that the deceased may have contributed to. This allows beneficiaries to maintain their standard of living and gives them the financial support they need during a difficult time.

While some life insurance policies may have a cash value component that accumulates over time and can be accessed or borrowed against, this is not the primary function of life insurance. Other choices mention health insurance coverage and emergency savings, which do not align with the primary role of life insurance, further emphasizing why the correct answer focuses on the provision of financial support following death.