LLQP Life Insurance · Component 1.1 · 35% of the exam
A client owns an RESP for his children. In assessing his situation, the agent should note that:
- AThe RESP terminates at death, so the accumulated balance is returned to the government along with the grants that were paid into it
- The RESP continues after death as an education resource, but future contributions stop, which may leave a shortfall
- CRESPs cannot be counted as resources, since the money belongs to the children rather than the estate
- DThe RESP is a form of life insurance, since it pays out to the children if the subscriber dies
Correct answer: B) The RESP continues after death as an education resource, but future contributions stop, which may leave a shortfall
The RESP's existing balance survives the subscriber's death (a successor subscriber is named), but the plan of future contributions dies with the income. Education funding is a capital need, reduced by the RESP balance.
Why the other options are wrong
- AThe RESP does not terminate at death.
- CThe RESP balance is exactly the kind of resource that offsets the education need.
- DAn RESP is a savings plan, not insurance.
Exam tip
Existing RESP = resource; planned future contributions = need. Split them.
Common mistake
Assuming the RESP alone will fund the children's education after the parent's death.
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.