What is a death benefit?

A death benefit is defined as the amount paid to the beneficiary upon the death of the insured. This is a fundamental concept in life insurance, as it represents the primary purpose of the policy: to provide financial support to the insured's beneficiaries in the event of their passing. The death benefit serves as a means to replace lost income, cover funeral expenses, or manage any outstanding debts that the insured may leave behind.

In a typical life insurance policy, the beneficiary—often a family member or loved one—receives this benefit tax-free, ensuring they have the necessary financial resources during a challenging time. The clarity and importance of this aspect not only solidify the function of life insurance but also illustrate how it provides peace of mind to individuals seeking to secure the financial future of their dependents. This understanding reinforces why option A is the correct answer, emphasizing the crucial role of death benefits in life insurance policies.