A client, age 70, has significant health issues and is concerned about leaving a legacy to their grandchildren. They have minimal liquid assets but own properties with substantial embedded capital gains. They are looking for a cost-effective way to cover potential future tax liabilities to preserve their estate. Which type of insurance is most suitable, assuming insurability?

Question: A client, age 70, has significant health issues and is concerned about leaving a legacy to their grandchildren. They have minimal liquid assets but own properties with substantial embedded capital gains. They are looking for a cost-effective way to cover potential future tax liabilities to preserve their estate. Which type of insurance is most suitable, assuming insurability?

Answer options:

• A 10-year term policy ✅ A universal life policy with a large death benefit and minimal savings component
• A long-term care policy
• A critical illness policy

Correct answer: A universal life policy with a large death benefit and minimal savings component

Explanation: A universal life policy with a large death benefit and minimal savings component is most suitable. This type of permanent insurance can be structured to provide a guaranteed death benefit, which can be used to offset tax liabilities on death (like capital gains on properties), thus preserving the estate for beneficiaries, without the need for a significant cash accumulation component.