Please use the following information to answer questions 6-7.

Adam owns a cottage in the Muskokas that he purchased when he was 25 years old for $50,000. That was 40 years ago. Now the Muskoka cottage is worth $400,000. Adam has a life partner, Ashley. They have lived together for 25 years. Adam wants to leave the cottage to Ashley as his parting gift. His accountant has told Adam that, at his death, there will be a significant income tax bill arising out of the cottage ownership. Adams financial advisor has suggested the purchase of life insurance to cover off the tax payable. 6. Which of the following represents the amount of potential tax liability arising from ownership of the cottage, assuming that (i) Adam has a life expectancy of an additional 5 years (based on a thorough evaluation of his health and medical condition), (ii) the cottage appreciates at 5% a year, (iii) Adam will be in a 44% tax bracket on death, and (iv) the rules regarding capital gains taxation on death remain the same as in 2007?

(A) $50,000

(B) $101,300

(C) $176,000

(D) $350,000

7. What would be the best way for Adam to provide for the potential tax liability arising from ownership of the cottage?

(A) Purchase a $350,000 term life insurance policy with an increasing death benefit factor of 5%.

(B) Purchase a $50,000 term life insurance policy with an increasing death benefit factor of 4%.

(C) Purchase a $264,700 whole life insurance policy with a guaranteed insurability option.

(D) Purchase a $100,000 universal life insurance policy with an indexed death benefit.