55. A married couple who wants life insurance benefits to pay estate taxes when the second spouse dies should purchase what policy?
Answer: C
Survivorship policy is the best choice for estate tax coverage.
A survivorship policy is specifically designed to provide a death benefit after the second spouse passes away, making it ideal for couples who need to ensure that their estate taxes can be covered at that time.
A) Family policy.
A family policy typically covers multiple family members under one plan but does not specifically address the needs of estate tax payments after the death of the second spouse. Therefore, it does not provide the targeted benefit necessary for the couple's situation.
B) Joint life policy.
A joint life policy pays out a benefit upon the first death, which would not fulfill the couple's requirement to cover estate taxes after the second spouse dies. This type of policy fails to align with their specific objective.
C) Survivorship policy.
The survivorship policy is designed to pay out a death benefit only after both spouses have passed away. This ensures that funds are available to cover estate taxes when the second spouse dies, making it the most suitable option for the couple's needs.
D) Universal life policy.
While a universal life policy provides flexible premium payments and death benefits, it does not specifically cater to the scenario of covering estate taxes after the death of the second spouse. Thus, it does not meet the couple's primary goal.
Conclusion
The survivorship policy is the most appropriate choice for the couple as it guarantees that a death benefit will be available after the second spouse's death, specifically for estate tax purposes. All other options fail to provide the necessary coverage upon the passing of both spouses, making them unsuitable for the couple's objectives.