Your client, age 56, overfunds their cash value life insurance policy, causing it to become a modified endowment contract (MEC). They are in need of cash as a result of a recent auto accident. All of these statements are true, except A) your client may withdraw funds from the cash value account and will pay ordinary income tax on the growth portion of the withdrawal and a 10% early withdrawal penalty. B) the death benefits of the policy will maintain their tax-free status despite now being a MEC. C) the MEC will be taxed on a "last-in-first-out" (LIFO) basis. D) the client may utilize a loan from the cash value account but will avoid paying the 10% early withdrawal penalty because this is an insurable casualty loss.