Pennsylvania Life and Health Insurance Exam Practice Question
An applicant purchases a life insurance policy to avoid the forced sale of assets upon his death. What is this action called?
Correct Answer: A
Rationale: The action of purchasing a life insurance policy to prevent the forced sale of assets upon death is known as estate conservation. This strategy helps ensure that assets can be passed on to heirs without being liquidated to cover debts or taxes.
Option B, capital retention, refers to keeping assets within a business or estate, but does not specifically address the issue of forced sales. Option C, buy-sell funding, relates to business ownership transitions and is not applicable in personal estate planning. Option D, capital liquidation, involves selling off assets, which contradicts the goal of preserving wealth for heirs.
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