LLQP Life Insurance · Component 1.3 · 35% of the exam
A client's needs analysis includes a large amount for 'income taxes at death'. The agent should be able to explain that this figure typically covers:
- Tax on the deemed disposition of capital property and on registered plans not rolled over
- BProbate fees charged by the province on the value of the estate before the executor can distribute anything to the heirs
- CThe survivors' future income tax on the insurance proceeds and the investment income they earn
- DEstate administration fees only, such as the executor's compensation and the lawyer's account
Correct answer: A) Tax on the deemed disposition of capital property and on registered plans not rolled over
The final return includes income to the date of death plus deemed dispositions and registered plan values. Together these can be the largest single liability of an estate. Probate fees are a separate, usually smaller, cost.
Why the other options are wrong
- BProbate fees are provincial fees, not income taxes.
- CThe survivors' future taxes are not an estate liability.
- DAdministration fees are separate and usually smaller.
Exam tip
Taxes at death = deemed dispositions + registered plans + final-year income. Probate is separate.
Common mistake
Conflating probate fees with income tax at death.
What this tests
CISRO competency component 1.3 — 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.