What is the primary purpose of insurance?

The primary purpose of insurance is to provide financial protection against losses. This protective function is fundamental to the insurance industry, as it enables individuals and businesses to mitigate the risks associated with unforeseen events. For instance, in the event of an accident, theft, or natural disaster, insurance can help cover the financial impact that would otherwise burden the insured party. This safety net allows policyholders to recover more easily from losses and continue their daily lives or operations without facing significant financial hardship.

The other options do not capture the essence of insurance's primary role. While insurance can contribute to wealth accumulation through certain products like whole life insurance, its primary function is not wealth generation. Similarly, managing business investments and promoting health and wellness may be components of specific insurance products or programs, but they do not encompass the overarching goal of what insurance aims to achieve. The central idea remains grounded in providing a financial safeguard against the unpredictable nature of risk.