Which of the following best describes the role of life insurance?

The role of life insurance is fundamentally about providing financial security for dependents in the event of the policyholder’s death. Life insurance is specifically designed to pay out a death benefit to beneficiaries, which can be used to cover ongoing financial needs, such as living expenses, mortgage payments, education costs, and other debts, ensuring that loved ones are not left in a precarious financial situation. This protection is particularly vital for individuals who have dependents relying on their income, as it helps to maintain their standard of living during a difficult time.

In contrast, health benefits during illness are typically covered by health insurance, which focuses on medical expenses rather than providing a monetary benefit upon death. Property damages are covered by homeowners or auto insurance, which protects physical assets rather than providing for dependents. Lastly, managing estate taxes is a function that may involve financial planning and various investment or legal strategies to mitigate tax liabilities, rather than the primary focus of life insurance, which is the immediate financial support to dependents when a policyholder passes away.