Oklahoma Life Producer Practice Exam

The primary purpose of life insurance is to accomplish what regarding an estate?

1. Preserve

2. Create

3. Enhance

4. Transfer

The correct answer is: Create

The primary purpose of life insurance in the context of an estate is to create an estate. Life insurance provides a financial benefit that becomes available upon the death of the insured, thus generating funds that can be used to cover expenses, debts, and provide for beneficiaries. This financial influx can effectively create an estate that might not otherwise exist, particularly for individuals who do not have significant assets or savings at the time of their passing. When someone invests in a life insurance policy, they are ensuring that their beneficiaries receive a death benefit that adds to their financial security. This is especially important for families with dependents or obligations that need to be met even after the individual has passed away. The life insurance payout functions as a financial resource that can address final expenses, pay off debts, or replace lost income, thereby helping to establish a financial legacy. The other options, while relevant to different discussions about an estate, do not capture the essence of how life insurance specifically contributes to the estate's creation. For instance, preserving, enhancing, or transferring estate assets involve different aspects of estate planning and management, rather than the direct avenue of establishing the estate that life insurance provides.