LLQP Life Insurance · Component 1.1 · 35% of the exam
A client's will leaves everything to her spouse. Her RRSP names her estate as beneficiary. What needs-analysis point should the agent raise?
- ANothing, since the will controls the RRSP and the spouse will receive it in any event under its terms
- BThat RRSPs cannot have beneficiaries, so the estate designation is the only one the plan permits
- CThat the spouse must pay tax immediately either way, so the designation makes no difference to the outcome
- That naming the spouse directly allows a tax-deferred rollover and avoids probate, whereas an estate designation may not
Correct answer: D) That naming the spouse directly allows a tax-deferred rollover and avoids probate, whereas an estate designation may not
A direct spousal designation permits the RRSP to roll to the spouse's plan without immediate tax and outside the estate. Through the estate the rollover may still be achievable but with probate exposure and more complexity. Beneficiary designations across all plans are part of assessing the client's situation.
Why the other options are wrong
- AA beneficiary designation on the RRSP governs the plan; the will does not override it.
- BRRSPs can and should have named beneficiaries.
- CA spouse can receive the RRSP on a tax-deferred rollover.
Exam tip
Check beneficiary designations on every registered plan, not just on insurance; a spousal designation preserves the rollover and avoids probate.
Common mistake
Believing the will controls assets that have their own beneficiary designations.
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.