QQuestionBusiness Law
QuestionBusiness Law
Which type of contract liquidates an estate through recurrent payments?
A. Universal life insurance
B. Whole life insurance
C. Annuity
D. 401(k)
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Answer
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Step 1:Let me solve this step by step:
Step 2:: Understand the Key Terms
- The problem asks about a contract that liquidates an estate through recurrent (recurring) payments - This means a financial instrument that provides systematic distributions over time
Step 3:: Analyze Each Option
A. Universal life insurance - Provides life insurance coverage with flexible premiums - Pays a death benefit, not recurring estate liquidation payments - NOT the correct answer B. Whole life insurance - Provides lifetime insurance coverage - Pays a lump sum death benefit - Does NOT provide recurrent estate liquidation payments - NOT the correct answer C. Annuity - A financial product that provides periodic payments - Can be structured to liquidate an estate systematically - Allows conversion of a lump sum into regular income streams - MATCHES the description in the question D. 401(k) - Retirement savings account - Typically accumulates funds, not designed for estate liquidation - NOT the correct answer
Step 4:: Reasoning
An annuity is specifically designed to convert a principal amount into a series of recurring payments, which directly matches the problem's description of liquidating an estate through recurrent payments.
Final Answer
Annuity
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