What is created when a life insurance policy is purchased?

When a life insurance policy is purchased, an immediate estate is created. This is because the insurance policy provides a death benefit to the policy's beneficiaries upon the insured's death, essentially handing over an immediate sum of money that can be used to cover expenses, debts, or contribute to the financial security of the beneficiaries.

The concept of an immediate estate in this context refers to the fact that the insured individual is providing a financial resource that is accessible to their beneficiaries immediately upon their death, regardless of whether the insured had significant assets or savings at the time of their passing. This immediate estate functions as a financial safety net and can be particularly vital for those with dependents or liabilities.

In contrast, the other options do not accurately describe the result of purchasing a life insurance policy. A temporary estate implies a limited or transient financial arrangement, whereas a deferred asset suggests a value that becomes accessible only after a specific period. Describing it as a financial burden overlooks the intended purpose of life insurance, which is to provide financial protection and support rather than impose additional stress on the beneficiaries.