Personal Uses of Life Insurance (ID-L)

A common reason to buy life insurance is to replace the deceased’s income that was lost and allow the surviving family members to maintain the same standard of living they had prior to the insured’s death. What is this reason called?

A life insurance policy can be a great way to provide survivors with the cash necessary to pay estate taxes, so that the assets don’t have to be quickly sold (perhaps at a reduced amount) to generate the cash needed to pay the taxes. What is this personal use of life insurance called?

Life insurance is said to be a liquid asset. What does that mean?

Martha purchased a life insurance policy and named her husband as the beneficiary. Her main reasons for purchasing the policy include preventing her husband and children from experiencing financial hardship while allowing them to maintain the same standard of living in the event of her death. What is this reason for personal life insurance called?

Permanent policies (such as whole life and universal life) have what that can be borrowed against or withdrawn?

The assets of a very wealthy person that dies can be subject to which type of tax?

Using life insurance to create an estate can be a good idea, since life insurance death benefits received by beneficiaries are what?

Which of the following is the best definition of an estate?