What is the primary purpose of life insurance?

The primary purpose of life insurance is to help meet the financial needs of dependents upon a person's death. Life insurance provides a financial safety net for the beneficiaries, ensuring that they are financially supported in the event of the policyholder's untimely passing. This support can cover various expenses, such as daily living costs, mortgage payments, educational expenses for children, and other debts, thereby helping to maintain the same standard of living that the dependents experienced while the insured was alive.

Other options involve significant financial considerations but do not align with the primary function of life insurance. While reducing tax liability can be a benefit in certain circumstances related to estate planning, it is not the core purpose of life insurance. Investing in stocks and funding retirement are important financial strategies; however, they serve different goals altogether and do not directly address the need to provide security for dependents in the face of unexpected loss.