Final answer:
The statement 'Life insurance creates an immediate estate' is true, as a life insurance policy pays out a death benefit upon the policyholder's death, generating immediate financial resources for their beneficiaries.
Step-by-step explanation:
The phrase 'Life insurance creates an immediate estate' is indeed true. When the insured individual dies, a life insurance policy pays out a death benefit. This lump sum can substantially increase the financial assets available to the insured's beneficiaries, effectively creating an immediate estate.
Specifically, cash-value (whole) life insurance policies not only provide a death benefit but also accumulate cash value over time. The policyholder can use this accumulated amount during their lifetime. Thus, life insurance serves two main purposes: it provides direct financial protection to the survivors and it can also act as an asset.
Funds received from a life insurance company after the policyholder's death can be significant, giving the beneficiaries immediate financial resources. It's also noteworthy that policyholders may have the option to borrow against the policy's cash value, but any such loans must be repaid with interest.