LLQP Ethics & Professional Practice · Component 1.5 · 60% of the exam
'Exemption from seizure' of insurance money means:
- With a family-class or irrevocable designation, the contract and proceeds are exempt from the owner's creditors, with exceptions
- BOnly registered plans are protected from seizure, since the exemption comes from the Income Tax Act
- CNothing connected with the policy can ever be seized, whatever the circumstances of the designation or the timing of the deposits
- DCreditors always prevail over beneficiaries, since debts must be paid before any gift can be made
Correct answer: A) With a family-class or irrevocable designation, the contract and proceeds are exempt from the owner's creditors, with exceptions
The exemption is a statutory benefit of insurance contracts, including seg funds and annuities.
Why the other options are wrong
- BInsurance law protection is separate from registered plan rules.
- CThe exemption has limits.
- DValid designations defeat ordinary creditor claims.
Exam tip
Exemption from seizure: qualifying designation, not for defeating creditors.
Common mistake
Promising protection for deposits made after insolvency.
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.