Mr. Sharma, 45, is the sole income earner for his family, supporting his wife and two young children. He earns $120,000 annually. They have a mortgage of $400,000, and his wife plans to return to school for re-training in two years. If Mr. Sharma were to pass away unexpectedly, what is the primary purpose of life insurance in this scenario?

Question: Mr. Sharma, 45, is the sole income earner for his family, supporting his wife and two young children. He earns $120,000 annually. They have a mortgage of $400,000, and his wife plans to return to school for re-training in two years. If Mr. Sharma were to pass away unexpectedly, what is the primary purpose of life insurance in this scenario?

Answer options:

• To provide a legacy for his children's future inheritance.
• To cover his funeral expenses and any outstanding personal debts. ✅ To replace his income and ensure his family can maintain their current lifestyle and pay off the mortgage and education expenses.
• To generate tax-sheltered investment growth for his family.

Correct answer: To replace his income and ensure his family can maintain their current lifestyle and pay off the mortgage and education expenses.

Explanation: The primary purpose of life insurance for an income earner with dependents is income replacement, ensuring the family can meet ongoing financial obligations like mortgage payments, living expenses, and future costs such as education, in the event of their premature death.