LLQP Segregated Funds & Annuities · Component 4.1 · 10% of the exam
A client asks to add her adult son as a joint owner of her non-registered segregated fund contract. The agent should explain that:
- Aadding an owner is a simple administrative change with no tax or legal consequence at all
- Bthe insurer will refuse, since segregated fund contracts may only ever have a single owner
- transferring part of the ownership can trigger a disposition and affect who controls the contract
- Djoint ownership is added automatically whenever an adult child is named as beneficiary
Correct answer: C) transferring part of the ownership can trigger a disposition and affect who controls the contract
Giving away part of the ownership of a non-registered contract is a disposition of that share for tax purposes, and the new owner gains rights over the contract. The client should take tax and legal advice before proceeding.
Why the other options are wrong
- AA change of ownership has both tax and control consequences that must be explained.
- BJoint ownership is available where the jurisdiction and the insurer permit it.
- DA beneficiary designation is entirely separate from ownership of the contract.
Exam tip
Adding an owner to a non-registered contract is a disposition, not an administrative edit.
Common mistake
Treating an ownership change as paperwork rather than as a transfer of property.
What this tests
CISRO competency component 4.1 — 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 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:
- A client is considering replacing her existing segregated fund contract with one from another insurer. Before any replacement the agent must:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.