Massachusetts Life Producer Practice Exam

What is the primary purpose of life insurance?

1. To serve as an investment tool

2. To provide financial support in the event of death

3. To cover health insurance costs

4. To fund retirement savings

The correct answer is: To provide financial support in the event of death

The primary purpose of life insurance is to provide financial support in the event of death. Life insurance is designed to offer a safety net for the policyholder's beneficiaries, ensuring that their financial needs can be met after the policyholder passes away. This can include covering daily living expenses, paying off debts, funding children's education, and maintaining the family's standard of living. While life insurance can have investment components in certain types of policies, its foundational goal remains the financial protection it provides to surviving loved ones. It is also distinctly different from health insurance, which is intended to cover medical expenses, and retirement savings products, which focus on accumulating funds for retirement. Thus, the emphasis of life insurance on safeguarding the financial future of beneficiaries clearly establishes why its primary purpose lies in providing financial support after the insured individual's death.