Clausen is exhausted and would like to spend time enjoying the remainder of his life. He is terminally ill and is expected to live less than a year. Assume that he would like to use his life insurance policy to fund the remainder of his life. Which of the following statements is correct?

A. Clausen could exchange the policy in a 1035 exchange for an annuity and will be subject to income tax on the transfer.
B. If Clausen borrows from the policy, then the loan will be considered a taxable distribution.
C. If Clausen surrenders his policy for accelerated death benefits, he will not be subject to income tax on the gain because he is terminally ill.
D. If Clausen's brother Charlie purchases the policy from Clausen at the fair market value, Charlie will receive the insurance proceeds income tax-free at Clausen's death.