LLQP Ethics & Professional Practice · Component 1.5 · 60% of the exam
The exemption from seizure for insurance contracts extends to segregated fund contracts and annuities because:
- AIt does not extend to them, since the exemption is limited to policies that pay a death benefit
- BThey are registered plans, and registered plans enjoy creditor protection under federal bankruptcy law in every province
- CThe insurer guarantees the protection as a contractual term of every segregated fund and annuity
- They are 'life insurance' under the Act, so a family-class or irrevocable designation brings the same protection
Correct answer: D) They are 'life insurance' under the Act, so a family-class or irrevocable designation brings the same protection
The statutory definition carries the protection to insurers' investment products.
Why the other options are wrong
- AThe exemption does extend to segregated funds and annuities.
- BRegistration is irrelevant to the insurance exemption.
- CThe protection comes from statute, not the insurer.
Exam tip
Seg funds/annuities = life insurance for exemption purposes.
Common mistake
Assuming mutual funds get the same protection.
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.