Question 57

Life insurance creates an immediate estate.

Life insurance provides a death benefit that is paid out to beneficiaries upon the policyholder's death, effectively creating an immediate estate for the heirs.

A) An annuity.

An annuity primarily serves as a retirement income vehicle and does not create an immediate estate. It provides periodic payments over time rather than a lump sum death benefit that beneficiaries can access directly.

B) Life insurance.

Life insurance is designed to provide a financial payout to beneficiaries upon the death of the insured, thus creating an immediate estate. This benefit can be used to cover debts, living expenses, or other financial needs of the beneficiaries.

C) A savings program.

A savings program accumulates funds over time but does not guarantee a payout upon death. Therefore, it does not create an immediate estate, as it lacks an instant benefit for beneficiaries at the time of the account holder's death.

D) Long-term care insurance.

Long-term care insurance provides coverage for services related to chronic illness or disability but does not create a death benefit. It focuses on healthcare needs rather than providing an immediate estate to beneficiaries.

Conclusion

Life insurance stands out as the only option that creates an immediate estate by providing a death benefit directly to beneficiaries upon the policyholder's passing. In contrast, annuities, savings programs, and long-term care insurance do not fulfill this role, as they either provide income over time or focus on specific care needs without ensuring an immediate financial benefit to heirs.