Challenge

Dr. James owns a thriving orthopedic practice and has accumulated significant assets. However, most of his net worth is illiquid — tied up in his practice and real estate holdings. He recently updated his estate plan and realized that his estate could face nearly $3M in projected federal estate taxes if he were to pass away in the next 10–15 years, before implementing a more permanent wealth transfer plan (such as funding an Irrevocable Life Insurance Trust with permanent coverage).

Solution

• Policy Type: 15-year level term policy
• Face Amount: $5,000,000
• Owner/Beneficiary: Irrevocable Life Insurance Trust (ILIT)
• Premium: Annual premium comfortably funded with after-tax income

Why It Worked

This term policy provided immediate estate liquidity for his heirs without forcing a fire sale of the practice or other assets. It bought time to implement a longer-term solution, such as converting a portion to permanent coverage or funding a second-to-die universal life policy in the future once business succession and gifting strategies are finalized.

Outcome

Dr. James felt peace of mind knowing that if something happened unexpectedly, his family would have liquidity to pay estate taxes, retain ownership of the practice until a buyer is found, and fulfill charitable bequests. In five years, he plans to convert part of the term policy into permanent coverage using the conversion rider, locking in insurability while he’s still healthy.