Why might a business owner in Alberta choose a Term-100 policy over a renewable Term-20 policy with a conversion option, when planning for long-term coverage for a key person or buy-sell agreement?

Question: Why might a business owner in Alberta choose a Term-100 policy over a renewable Term-20 policy with a conversion option, when planning for long-term coverage for a key person or buy-sell agreement?

Answer options: ✅ The Term-100 policy guarantees a level premium for the life of the insured, avoiding potential increases associated with renewing a Term-20 policy or converting it at an older age or impaired health.

• Term-100 policies accumulate significant cash surrender values, which can be accessed for business liquidity needs.
• Term-100 policies automatically adjust their death benefit to match the changing value of the business, unlike Term-20 policies.
• The initial premium for a Term-100 policy is typically lower than a Term-20 policy, making it more cost-effective in the short term.

Correct answer: The Term-100 policy guarantees a level premium for the life of the insured, avoiding potential increases associated with renewing a Term-20 policy or converting it at an older age or impaired health.

Explanation: A Term-100 policy offers guaranteed level premiums for the insured's lifetime (up to age 100), eliminating the risk of escalating costs that come with renewing or converting a Term-20 policy at older ages or with adverse health changes, providing premium stability for long-term business planning, which is a key advantage of T100 plans.