LLQP Life Insurance · Component 1.1 · 35% of the exam
A client holds a locked-in retirement account from a former employer. For the needs analysis the agent should record that:
- Athe balance is fully available to survivors immediately as cash on the client's death
- Blocked-in money is forfeited to the former employer when the member dies
- it is a resource for the survivors, though its value is taxable unless a spouse receives it
- Dthe account cannot be counted at all because the money is locked in permanently
Correct answer: C) it is a resource for the survivors, though its value is taxable unless a spouse receives it
Locked-in money passes to the designated beneficiary and is a real resource. A surviving spouse can transfer it on a rollover basis, while any other recipient triggers an income inclusion on the final return.
Why the other options are wrong
- AThe amount reaches survivors but is not simply tax-free cash.
- BThe member's entitlement is not forfeited on death.
- DLocking in restricts access during life, not the death benefit.
Exam tip
Locked-in accounts count as a resource; the tax depends on who receives them.
Common mistake
Excluding locked-in balances from the resources available to survivors.
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.