VirtualSC Personal Finance Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 400

What is the primary purpose of life insurance?

To provide a savings account for emergencies

To give cash benefits to the policyholder during their lifetime

To provide financial protection to beneficiaries after the policyholder's death

The primary purpose of life insurance is to provide financial protection to beneficiaries after the policyholder's death. This type of insurance is designed to ensure that in the event of the policyholder's passing, their dependents or loved ones receive a financial payout, which can be used to cover expenses such as mortgage payments, educational costs, or daily living expenses. This financial support can help maintain the beneficiaries' standard of living and provide a safety net during a challenging time.

The focus of life insurance is on death benefits rather than providing savings or covering medical expenses. While some policies may offer cash value accumulation or living benefits, the fundamental goal is to protect the financial future of the policyholder's beneficiaries. Therefore, the correct choice emphasizes the essential role of life insurance in offering security and stability for those left behind.

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To cover medical expenses for the policyholder

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