LLQP Life Insurance · Component 3.2 · 25% of the exam
A client wants to fund a future education need for a grandchild through life insurance. Which structure is commonly used?
- AA term policy on the grandchild, which pays the education fund if the child dies before finishing school and is otherwise refunded
- BGroup insurance through the client's employer, with the grandchild named as beneficiary of the dependent life benefit
- CAn accidental death rider on the client's policy, with the proceeds directed to the grandchild's RESP
- A permanent policy on the client or grandchild whose death benefit or cash value provides the funds, with a trustee for a minor
Correct answer: D) A permanent policy on the client or grandchild whose death benefit or cash value provides the funds, with a trustee for a minor
Education funding is on the curriculum's list of needs. Because a minor cannot receive proceeds directly, the plan should include a trustee designation; the agent works with the client's other advisors on the tax and legal structure.
Why the other options are wrong
- ATerm on the grandchild does not fund education; it pays on the child's death.
- BGroup insurance is not a funding tool for a personal goal.
- CAccidental death riders are not funding tools.
Exam tip
Funding for a minor needs a trustee designation; coordinate the structure with the client's legal and tax advisors.
Common mistake
Naming a minor as beneficiary without a trustee.
What this tests
CISRO competency component 3.2 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Life Insurance module. Written against the published curriculum.
More from component 3
- At policy delivery, the agent should obtain:
- The effective date of a life insurance policy is generally:
- A client's application is approved but he has not paid the first premium when the policy is delivered. The agent should:
- A pre-authorized debit form is part of implementation because:
- During implementation, the agent learns the client wants the policy owned by her corporation instead of personally, as first applied for. The correct step is:
- Which of the following is a legitimate reason an insurer might refuse to issue a policy even after favourable underwriting?
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.