LLQP Life Insurance · Component 3.2 · 25% of the exam
'Gift strategies' as a tax-efficiency topic in the Life module refers to:
- AGiving away the policy to the agent, so the agent can hold it in trust for the client's family
- Transferring assets to family or charities in ways that reduce tax, within the attribution and deemed-disposition rules
- CGifts from the insurer to beneficiaries in addition to the death benefit, such as bereavement counselling
- DInsurer promotional gifts to clients who buy policies, which are treated as taxable benefits and must be reported on the client's return
Correct answer: B) Transferring assets to family or charities in ways that reduce tax, within the attribution and deemed-disposition rules
Gifts of appreciated property trigger a deemed disposition at fair market value, and gifts to a spouse or minor child are subject to attribution of income. Life insurance can fund the tax on such transfers or be the gift itself (a policy on a child, for example).
Why the other options are wrong
- AGiving a policy to the agent is unethical and unrelated.
- CInsurer payments to beneficiaries are death benefits, not gifts.
- DInsurer promotions are not tax strategies.
Exam tip
Gifts of appreciated property are deemed dispositions; gifts to a spouse or minor attract attribution. Insurance can fund the tax or be the gift.
Common mistake
Assuming gifts of property during life are tax-free.
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.