Ms. Audrey Lévesque, 58, a high-net-worth individual in Québec, purchased a Term-100 (T100) policy 15 years ago for estate liquidity purposes. She is generally healthy but recently suffered a heart attack. Her advisor, Jean-Pierre, suggests she consider converting her T100 to a Universal Life (UL) policy to allow for more flexible premium payments and potential investment growth. What would Jean-Pierre need to advise Ms. Lévesque about during this proposed conversion?

Question: Ms. Audrey Lévesque, 58, a high-net-worth individual in Québec, purchased a Term-100 (T100) policy 15 years ago for estate liquidity purposes. She is generally healthy but recently suffered a heart attack. Her advisor, Jean-Pierre, suggests she consider converting her T100 to a Universal Life (UL) policy to allow for more flexible premium payments and potential investment growth. What would Jean-Pierre need to advise Ms. Lévesque about during this proposed conversion?

Answer options: ✅ A T100 policy generally does not have a conversion privilege to a UL policy, as T100 is already a form of permanent insurance, and any change would require applying for a new policy with new medical underwriting.

• Converting from T100 to UL would automatically reduce her capital gains tax liability on her estate without further planning.
• The premiums for the UL policy would be guaranteed to be lower than her current T100 premiums.
• The T100 policy would have accumulated substantial cash values that could be transferred directly into the new UL policy's investment component.

Correct answer: A T100 policy generally does not have a conversion privilege to a UL policy, as T100 is already a form of permanent insurance, and any change would require applying for a new policy with new medical underwriting.

Explanation: T100 policies are typically considered permanent insurance and usually do not offer a conversion privilege to another type of permanent policy like UL. Any change would necessitate a new application and medical underwriting, which would be problematic given her recent heart attack, as per the non-convertible nature of most T100 policies to other permanent plans.