Q: Abdul (age 49) and Jasmine (age 48) have grown children (a son and a daughter).

The couple
have lived and worked in Canada for the past 22 years. Abdul owns and operates his own taxi,
while Jasmine works in the accounting department of a large general insurance company.
In addition to their home and Abdul's taxi licence, the couple has acquired a rental property and
have fully funded their RRSPs.
Currently, their statement of assets and liabilities appears as follows:

ASSETS
Item
House
Rental property
Furnishings, etc.
Automobile
Taxi licence
Savings bonds
RRSPs
Life insurance

LIABILITIES
Home mortgage
Credit cards
Car loan

NET WORTH

ABDUL
FMV
$245,000
400,000
8,000
21,000
190,000
18,000
140,000
25,000
$1,047,000

JASMINE
Cost
$60,000
90,000
17,500
32,000
40,000
10,000
91,000
2,000

FMV
$245,000
0
12,000
0
0
10,000
120,000
10,000
$407,000

$0
2,000
7,000
$9,000

$0
1,000
0
$1,000

$1,038,000

$406,000

Cost
$60,000
0
17,500
0
0
10,000
55,000
5,500

The couple's long-term estate-planning objective is to pass along a substantial estate to their
children.
Abdul and Jasmine have their mortgage paid off and their children educated. Which of the
following combination of options would you recommend to the couple?

life non-par policies on each of Abdul and Jasmine.

Universal life insurance coverage on the couple (with a term rider on Abdul).
Term-to-100 coverage on each of Abdul and Jasmine.
Term-to-100 insurance on Jasmine, 10-year renewable term coverage on Abdul.
The correct answer is : Universal life insurance coverage on the couple (with a term rider on Abdul).
Rationale:
Rationale for Correct Answer:
With their liabilities paid off and their RRSP contributions maxed out, the couple will be looking for a
tax-deferral vehicle in which to invest their excess capital. Universal life can provide the flexibility
required for these additional deposits with diverse investment opportunities available.
The term rider on Adbul's life could assist with capital-gains-tax liability on the taxi licence and rental
property if he should predecease Jasmine.
Reasons the other answers are incorrect:
are incorrect because Term-to-100 and whole life do not offer investment opportunities combined with
life insurance.

Answer is "The reinstatement period of a lapsed policy is one year from the end of the "grace period.
The question looks for a statement that is "false". The minimum grace period provided in a life
insurance policy is 30 days. A person over 16 years of age can enter into an insurance contract.
The exclusion period under a suicide exclusion clause is usually two years. The reinstatement period
after a policy has lapsed is two years and NOT ONE YEAR as stated in the question.

As the Fair market value of the property might be increasing (under normal circumstances), the death
benefit may be indexed to reflect the increase in the capital gains tax that will be due on Ryan's death.

Rationale: The answer is "Level Premiums"

Whole life policy offers cash surrender value. Term-to-100 insurance does not build up cash
values.

Policy dividends are available only from participating whole life policies.

Policy loans are taken against the CSV of a whole life policy. Term-to-100 policy has no cash
values and hence policy loans cannot be taken in a term-to-100 policy.

Premiums are level in both whole life policy and term-to-100 policies.

Adding this rider will enable Roxie to increase the benefit of the policy without evidence of insurability.
As her budget is tight, she may not be able to afford the premiums for higher amounts of benefit

currently. She would do good to add on a GIB rider, so that she can increase the benefit later when
she can afford the higher premiums, even if she is uninsurable.

Q: Jenny Marsden is 87 years old, and increasingly suffers from senile dementia. It
is possible she has Alzheimer's disease. Her husband, Norm, helped Jenny take out a
whole life policy with a $250,000 death benefit 27 years ago. Norm died six years
ago. Jenny is the policy owner and, in the last two years, she has changed the
beneficiary on the policy sixteen times. The last time, she threatened to overlook
her children as beneficiaries and name the Furry Feline Society as beneficiary until
her oldest son learned of Jenny's intention and stepped in. What should happen to
Jenny's policy to maintain its integrity?
An absolute assignment should be made of the policy, ideally to one of her

children or to her lawyer or power of attorney.

A collateral assignment should be

made of the policy to a financial institution that would maintain the children as
beneficiaries.

The policy should be allowed to lapse, since Norm and Jenny would

never originally have intended the Furry Felines to receive the death benefit.

The

policy should be rescinded by Jenny's power of attorney.

You are correct!!!
The answer is An absolute assignment should be made of the policy, ideally to one of her children or to
her lawyer or power of attorney.
Rationale:
Rationale for Correct Answer:
An absolute assignment transfers all rights of the policy owner, including the right to appoint a
beneficiary, to another party.
Reasons the other answers are incorrect:
Lapsing the policy means no death benefit; obviously this was not an intention of Norm or Jenny.
A policy can only be rescinded in the 10-day rescission period.
Collateral assignment is made as security for a loan.
The correct answer is "Preferred beneficiaries are always protected from claims of creditors of the
insured."
Preferred beneficiary is one amongst Spouse, child, grandchild or parent. If a preferred beneficiary has
been named, the cash values of the policy are protected from the insured's creditor, while the insured
is alive. On death the proceeds are protected as the proceed bypasses the probate process.

You are correct!!!

The answer is Options 1 and 2
Rationale: The answer is "options 1 and 2"
Both Whole life policies and Universal Life Insurance policies offer loan against cash values and the
insured is entitled to the cash surrender value on surrendering the policy. The insured will have death
benefit options only in a universal life policy. Variable premiums apply only into universal life policies
and paid-up insurance is guaranteed only in a whole life policy.