Which of the following describes a common use of life insurance in estate planning?

In the context of estate planning, one of the primary purposes of life insurance is the conservation of estate value. This means that life insurance can play a critical role in preserving the financial well-being of an estate after a policyholder has passed away.

When a person dies, their estate may be subject to various expenses, taxes, and debts. Life insurance provides a death benefit that can be used to cover these financial obligations, thereby preventing the need to liquidate other assets in the estate, which could potentially deplete its overall value. This financial tool helps ensure that the heirs receive the maximum value from the estate, maintaining its integrity and intended legacy.

This role in estate planning highlights the importance of life insurance in providing liquidity, making it easier to manage estate taxes and other final expenses, and helping heirs to inherit the full value of an estate without being affected by immediate cash flow issues.

Other responses, while they touch on aspects of financial planning, do not specifically address the significant role that life insurance products can play in protecting and managing the overall value of an estate.