LLQP Life Insurance · Component 1.3 · 35% of the exam
Most of a client's savings sit in locked-in and registered plans. The analysis should note that these resources:
- Acannot be counted as resources because they are held in registered plans
- Bare exempt from tax at death provided a beneficiary has been designated
- reach survivors but with tax consequences unless a spouse receives them
- Dare fully liquid and available to survivors without any deduction whatever
Correct answer: C) reach survivors but with tax consequences unless a spouse receives them
Registered plan value is included in the deceased's income unless a spouse or dependent child receives it, so only the after-tax amount is genuinely available. Liquidity and timing also matter to survivors needing cash quickly.
Why the other options are wrong
- ARegistered balances are real resources and must be counted.
- BA designation avoids probate but not the income inclusion.
- DThe amounts are reduced by the tax arising on the final return.
Exam tip
Count registered savings after tax, not at their statement value.
Common mistake
Listing registered balances at face value as resources for survivors.
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.