LLQP Ethics & Professional Practice · Component 1.5 · 60% of the exam
A 'trustee' designation for an adult beneficiary who is incapable:
- AIs impossible, since the Act permits a trustee only for a beneficiary who is a minor
- BMakes the trustee the beneficiary in law, so the incapable adult loses any entitlement to the proceeds
- CIs prohibited by the Act, since an adult beneficiary must receive the proceeds directly or through a court-appointed guardian
- Is prudent; alternatively the proceeds go to the beneficiary's legal representative, or a settlement option is elected
Correct answer: D) Is prudent; alternatively the proceeds go to the beneficiary's legal representative, or a settlement option is elected
Planning for incapable beneficiaries protects the proceeds and may preserve government benefits (with a proper trust).
Why the other options are wrong
- AIt is possible and advisable.
- BThe trustee holds for the beneficiary.
- CTrustee designations for incapable adults are permitted.
Exam tip
Incapable beneficiary: trustee/trust, or legal representative, or settlement option.
Common mistake
Naming a disabled adult child directly and jeopardizing provincial benefits.
What this tests
CISRO competency component 1.5 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.