Question

31 jade owns golden travels ltd. and estimates that the company has an unrealized capital gain of $70,000 based on the undeveloped land it owns. jade wants to make sure that when he dies, funds will be available to pay the outstanding taxes resulting from the gain, and that his children can take over golden travels ltd. without significant debt. however, jade is also considering selling the business over the next few years, in which case, he will not need insurance.
what option will offer jade the coverage he requires for as long as he owns golden travels ltd., as well as provide some benefits in case he decides to cancel the policy prior to his death?
qw96wusvwwnocncvqwppz0hyvibout09?
a. 20 - year decreasing term insurance
b. whole life insurance
c. term - to - 100 insurance
d. 10 - year level term insurance
qw96wusvwwnocncvqwppz0hyvibout09
next question submit exam

Explanation:

To solve this, we analyze each option:

• Option a (20 - year decreasing term insurance): Term insurance has no cash value, so canceling prior to death gives no benefits. Also, it's for a fixed term (20 years), but Jade may own the business longer or sell it, so coverage duration may not match.
• Option b (Whole life insurance): Provides lifelong coverage (as long as premiums are paid) and has a cash - value component. If Jade cancels the policy (surrenders it), he can receive the cash value. This matches his need for coverage as long as he owns the business and benefits if he cancels before death.
• Option c (Term - to - 100 insurance): While it provides coverage until age 100, it typically has little to no cash value, so canceling prior to death would not provide benefits.
• Option d (10 - year level term insurance): Similar to 20 - year term, it has no cash value, and the 10 - year term may be too short if Jade owns the business longer than 10 years.

Answer:

b. Whole life insurance