Jasper owns TeleVida, a successful production company with over 50 employees. He wants to expand the company by opening an office in another province. Jasper needs to take out a $500,000 20-year loan to make this expansion happen. However, he wants to make sure that if hedies while there’s an outstanding balance on the loan, the balance will be paid in full by the insurance company.

Jasper requires insurance coverage for a specific loan with a 20-year term, where the outstanding balance will decrease over time. A 20-year decreasing term life insurance policy is designed precisely for this situation. The death benefit of this policy reduces over the 20-year period, scheduled to mirror the declining balance of the loan. This ensures that if Jasper dies, the benefit paid will be sufficient to cover the remaining debt. It is the most cost-effective and suitable product because the premium is based on a decreasing amount of coverage, aligning perfectly with the diminishing liability.

B. 20-year term life insurance: This policy provides a level death benefit for 20 years, making it more expensive than necessary as the loan balance decreases over time.
C. Term-100 life insurance policy: This is a form of permanent insurance. It is unsuitable and unnecessarily expensive for a temporary need like a 20-year loan.
D. Universal life insurance policy: This is a permanent policy with an investment component, making it an inappropriate and costly solution for covering a temporary debt obligation.

1. IFSE Institute, Life Insurance (LLQP) Course, Module 4: Term Life Insurance Products, Section 4.3 "Decreasing Term Insurance". This section explicitly states that decreasing term insurance is commonly used to cover debts that reduce over time, such as mortgages or business loans, as the death benefit is designed to match the declining principal.

2. IFSE Institute, Life Insurance (LLQP) Course, Module 4: Term Life Insurance Products, Section 4.2 "Level Term Insurance". This section clarifies that level term policies maintain a constant death benefit, which would result in over-insurance and higher costs for a decreasing debt scenario.

3. IFSE Institute, Life Insurance (LLQP) Course, Module 5: Permanent Insurance Products, Sections 5.2 "Term-to-100" and 5.4 "Universal Life Insurance". These sections describe permanent insurance products, highlighting their lifelong coverage and higher cost structure, which are inappropriate for a finite, 20-year financial obligation.