New York State Life Insurance Exam Questions Practice Question
When individuals purchase life insurance to enable their heirs to pay estate taxes, this is called
Correct Answer: A
Rationale: Estate conservation refers to strategies that help preserve the value of an estate for heirs, often by using life insurance to cover estate taxes. This ensures that beneficiaries receive the intended inheritance without financial burdens.
Estate creation (B) involves building assets, not specifically addressing tax obligations. Liquidity (C) pertains to the availability of cash or assets to meet immediate needs, but does not directly relate to estate taxes. Survivor protection (D) focuses on providing financial support to dependents after a death, which, while important, does not specifically target the payment of estate taxes.
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