LLQP Segregated Funds & Annuities · Component 4.2 · 10% of the exam
A beneficiary would rather receive the death benefit over several years than as a single payment. The agent should explain that this is possible:
- where the contract offers a settlement option, which the holder may also have selected in advance
- Bin every case, since beneficiaries may always dictate how an insurer settles a claim
- Conly if the beneficiary signs an agreement to repay the insurer should she die early
- Donly after a court has approved the instalment arrangement proposed by the beneficiary
Correct answer: A) where the contract offers a settlement option, which the holder may also have selected in advance
Settlement options let proceeds be paid over time rather than at once, which can protect a beneficiary who is young, vulnerable or inexperienced. The contract holder can specify the arrangement in advance so the choice is not left to the moment.
Why the other options are wrong
- BThe option must exist under the contract; a beneficiary cannot impose terms.
- CNo repayment agreement is required for a settlement option.
- DCourt approval is not needed for a contractual settlement option.
Exam tip
Settlement options can be chosen by the holder in advance, not just at claim time.
Common mistake
Assuming every death benefit must be paid as a single lump sum.
What this tests
CISRO competency component 4.2 — Provide customer service during the validity period of the coverage — which is weighted at 10% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 4
- A client's daughter was born last month and the client wants her added to the segregated fund designation. The agent should:
- A client wants to withdraw part of his segregated fund before maturity. The agent should explain:
- A client's segregated fund contract is approaching its maturity date. The insurer will:
- A client asks to add her adult son as a joint owner of her non-registered segregated fund contract. The agent should explain that:
- A client wants to replace the beneficiary on a contract where the current designation was made irrevocable. The agent must explain that:
- A client who has lost her job asks to pause her pre-authorized monthly contributions for six months. The agent should:
Practice the whole Segregated Funds & Annuities module
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