LLQP Life Insurance · Component 1.1 · 35% of the exam
A client asks whether her employer's pension plan will pay her spouse anything if she dies before retirement. The agent's accurate answer is:
- AOnly if she has worked 25 years, since pre-retirement death benefits vest after that period of service
- BNothing, since pension plans pay benefits only to members who survive to retirement
- Most registered pension plans provide a pre-retirement death benefit to the spouse, often the commuted value of the accrued pension
- DHer full salary for life, since the plan is required to replace the income the spouse would have received had she lived to retirement
Correct answer: C) Most registered pension plans provide a pre-retirement death benefit to the spouse, often the commuted value of the accrued pension
Pension legislation requires a pre-retirement death benefit for the spouse, typically the commuted value of the accrued pension. It is a resource in the needs analysis, and its amount depends on years of service.
Why the other options are wrong
- AThe benefit depends on accrued pension, not a 25-year threshold.
- BPension plans do pay pre-retirement death benefits.
- DNo plan pays full salary for life to a survivor.
Exam tip
Ask for the pension statement: the pre-retirement death benefit is a real, sometimes substantial, resource.
Common mistake
Ignoring the employer pension when totalling resources.
What this tests
CISRO competency component 1.1 — Assess the client's needs and situation — which is weighted at 35% of the Life Insurance module. Written against the published curriculum.
More from component 1
- A client's existing policies were all sold by another agent who has left the business. The reviewing agent should:
- A client supports an adult child with a permanent disability who will never be self-sufficient. In the needs analysis this is:
- A self-employed client's income fluctuates widely year to year. When determining the income to replace, the agent should:
- A 58-year-old client plans to retire at 65 and has a pension that will pay a survivor benefit. How does time to retirement affect the life insurance need?
- Which of the following is a capital expense arising at death, rather than an ongoing income need?
- A client is the sole income earner in a household with a stay-at-home spouse and two young children. The greatest risk that life insurance on the client addresses is:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.