What does life insurance provide to beneficiaries upon the death of the insured?

Life insurance primarily serves to provide financial security to the beneficiaries of the insured upon their death. When the insured passes away, the life insurance policy pays out a death benefit, which constitutes an immediate estate. This benefit can help cover funeral costs, pay off debts, and provide financial support for the surviving family members, effectively acting as a financial safeguard in times of loss.

The other options do not accurately describe the core function of life insurance. A replacement policy does not come into play upon the insured's death; instead, it refers to a new policy that might take the place of an existing one. Tax benefits are not the primary aim of life insurance; while some benefits may be tax-free, that’s a secondary outcome. Similarly, while life insurance can provide financial support, it is not specifically intended to serve as a retirement fund, which is typically the purpose of other financial products such as annuities or retirement accounts. Therefore, the provision of an immediate estate through the payment of the death benefit is the essential function of life insurance.