LLQP Life Insurance · Component 2.1 · 30% of the exam
A client's employer offers a group RRSP and group life. The agent explains that, unlike the RRSP, the group life plan:
- ABelongs to the employee and is fully portable, so the coverage follows the employee to any new employer without evidence of insurability
- BHas a cash value that accumulates from the employer's contributions and can be withdrawn on leaving
- CIs taxed on withdrawal in the same way as the RRSP, since both are employer-sponsored tax-assisted plans
- Is not portable in the ordinary sense; coverage ends with employment subject to conversion
Correct answer: D) Is not portable in the ordinary sense; coverage ends with employment subject to conversion
Group RRSP assets are the employee's property. Group life is a plan benefit that ends with membership. The comparison is useful when clients assume everything 'through work' travels with them.
Why the other options are wrong
- AGroup life is not portable beyond conversion.
- BGroup term life has no cash value.
- CGroup life is not withdrawn; it is a death benefit.
Exam tip
Group savings = yours. Group insurance = the plan's.
Common mistake
Assuming group life coverage follows the employee to a new job.
What this tests
CISRO competency component 2.1 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.