Which life insurance policy would be most suited to meet the couple’s needs?

Aari and Jonila are a married couple in their late sixties. They both enjoy a comfortable retirement. Both receive regular payments from their pension plans, Old Age Security (OAS) and Canada Pension Plan (CPP). They own a house and a cottage that are both mortgage-free. They also have over $500,000 in savings and investments. They know that if one of them dies, the surviving spouse will be financially comfortable. The couple has two grown children to whom they would like to leave all their assets when they die. The couple informs Herbert, their insurance agent, that they want to make sure when they die that their children have the funds needed to pay the taxes on the assets that they will bequeath them.

Which life insurance policy would be most suited to meet the couple’s needs?
A . A permanent joint last-to-die policy on Aari and Jonila.
B . A permanent joint first-to-die policy on Aari and Jonila.
C . A term joint last-to-die policy on Aari and Jonila.
D . A term joint first-to-die policy on Aari and Jonila.

View Answer

Answer: A

Explanation:

A Joint Last-to-Die policy is designed to pay out upon the death of the second insured, which is beneficial for covering estate taxes. This structure aligns with Aari and Jonila’s goal to provide funds for their children to pay taxes on inherited assets. Permanent coverage ensures the policy remains in force until both spouses have passed away, which supports long-term estate planning needs. First-to-die policies would pay out upon the death of the first insured, which would not align with their objective to have the policy available for estate settlement at the second death. Therefore, Option A is most suitable.