What does life insurance guarantee?

Life insurance is primarily designed to provide financial support to beneficiaries upon the death of the insured individual. The main function of life insurance is to ensure that a predetermined sum of money, known as the death benefit, is paid out to the designated beneficiaries when the policyholder passes away. This can help support loved ones in managing financial obligations that arise after a death, such as mortgage payments, education costs, or daily living expenses.

While some life insurance policies may offer additional features, like provisions for terminal illness, the core guarantee remains the payment upon the policyholder's death. This is what distinguishes life insurance from other types of insurance that might cover disability or specific expenses tied to funerals and burial costs. Thus, the correct understanding is centered on the assurance of a financial payout specifically linked to the policyholder's death.