2. Life Insurance Creates an Immediate Estate

For example, some life policies (those that provide permanent protection, such as whole life)

accumulate cash value that is available to the policyowner during the policy term.

With liquidity, the policy's cash values can

borrowed against at any time and used for immediate needs.

There is no other legal method by which an immediate estate can be

created at such a small cost.

The purchase of life insurance

creates an immediate estate.

A person may create an estate through

earnings, savings, and investments, but all of these methods require disciplined action and a significant period of time.

Life insurance proceeds may be used to

pay inheritance taxes and federal estate taxes so that it is not necessary for the beneficiaries to sell off the assets.

II.A.9. Be able to identify the meaning of the statement

"Life insurance creates an immediate estate."

As a result of the cash accumulation feature,

some life insurance policies provide liquidity to the policyowner.

Life insurance may be used to accumulate specific amounts of monies for specific needs with guarantees

that the money will be available when needed.

Estate creation is especially important for young families that are getting started and have not yet had time to accumulate assets. When an insured purchases a life insurance policy,

they will have an estate of at least that amount the moment the first premium is paid.