Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called
Estate conservation
estate planning.
Estate planning is the process of preparing for the disposal of an individual’s assets upon death. It involves various mechanisms that are put in place to ensure that an individual’s assets are distributed according to their wishes, and in a way that minimizes the tax burden on their estate.
One of the key components of estate planning is life insurance. By purchasing a life insurance policy, an individual can ensure that upon their death, their surviving family members or beneficiaries will receive a certain amount of money. This can provide a financial cushion that can be used to pay for funeral expenses, outstanding debts, or other financial obligations that might arise.
Additionally, life insurance can be used to avoid the forced sale of assets upon death. For example, if an individual owns a family business that they want to pass down to their children, but they also have a substantial amount of debt, their creditors may seek to force the sale of the business in order to pay off the debt. By purchasing a life insurance policy that is specifically designed to cover the outstanding debt, the individual can ensure that their family business remains intact and is passed down to the next generation.
Overall, purchasing a life insurance policy as part of the estate planning process can be an effective way to protect one’s assets and ensure that their wishes are carried out upon their death.
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