Question

A person would look into buying life insurance for all of the following reasons except:

A) Accumulate a specific amount of money.
B) Generate income.
C) Protect survivors.
D) Create an immediate estate.

Answer 1

Life insurance is mainly for financial protection of family after one's death, creating an immediate estate, and potentially accumulating a specific amount of money. Generating income is not a primary reason for buying life insurance, making option B the correct exception.

Step-by-step explanation:

A person would look into buying life insurance primarily for financial protection of their family or dependents in the case of their death, which makes 'C) Protect survivors' a valid reason. Life insurance can also be structured in such a way that it 'A) Accumulates a specific amount of money' through a cash-value policy, and it can 'D) Create an immediate estate' for the insured's beneficiaries upon their death. However, the main purpose of life insurance is usually not to 'B) Generate income' which you might expect from investments like stocks, bonds, or savings accounts that provide dividends or interest; therefore, B is the exception.

Life insurance provides a death benefit which helps to secure the financial future of the insured's beneficiaries after they pass away. Some life insurance policies also have a cash value component that grows over time, and this can be borrowed against, though it is not its primary function. Hence, while life insurance can have cash accumulation features, it's not typically considered a significant income-generating vehicle.

Answer 2

Life insurance is mainly purchased to C) protect survivors financially, create an estate, and accumulate cash value, not to generate income.

Step-by-step explanation:

A person would look into buying life insurance primarily for a few key reasons, most of which revolve around providing financial security and benefits for the insured's beneficiaries or the policyholder themselves. These include the need to protect survivors financially in the event of the policyholder's death, creating an immediate estate to leave behind, and accumulating a specific amount of money through a cash-value policy that can be used during the policyholder's lifetime.

However, using life insurance to generate income is not typically a primary reason for purchasing a policy. Income generation is more commonly associated with investments such as stocks, bonds, retirement accounts, or other financial tools. Life insurance may offer a death benefit and a cash value that can be borrowed against, but the primary intent is not to serve as an income-generating investment.