A business owner client has recently established a holding company to manage passive investments and retain earnings from their operating business. They are concerned about their ability to maintain their current lifestyle for their family should they face a critical illness that prevents them from working. Which insurance solution is most appropriate to integrate into their wealth plan to address this specific risk?

Question: A business owner client has recently established a holding company to manage passive investments and retain earnings from their operating business. They are concerned about their ability to maintain their current lifestyle for their family should they face a critical illness that prevents them from working. Which insurance solution is most appropriate to integrate into their wealth plan to address this specific risk?

Answer options:

• A Term Life Insurance policy on the business owner's life.
• A Universal Life Insurance policy held personally by the business owner. ✅ A Critical Illness Insurance policy, potentially structured with corporate ownership.
• A Disability Insurance policy covering loss of income from the operating business.

Correct answer: A Critical Illness Insurance policy, potentially structured with corporate ownership.

Explanation: Critical Illness Insurance provides a lump-sum payment upon diagnosis of a covered illness, which can be used to maintain lifestyle, cover medical expenses, or replace income, directly addressing the client's concern about a critical illness impacting their ability to work and support their family. Corporate ownership can offer tax advantages depending on the specific provincial tax rules and the nature of the policy. Disability insurance covers loss of income, but critical illness specifically targets the event of a severe illness, which is what the client is most concerned about. Life insurance addresses mortality, not critical illness.