LLQP Segregated Funds & Annuities · Component 4.1 · 10% of the exam
A client asks to change the annuitant on a segregated fund contract. The agent should explain:
- AIt is always permitted on request, since the annuitant is simply a measuring life the owner may select at any time
- BIt is free of tax and charges, since a change of annuitant does not affect the contract's value or ownership
- CIt requires only a telephone call to the insurer, since the change is administrative rather than contractual
- Most contracts do not allow it after issue; the alternative is a new contract, with tax if non-registered
Correct answer: D) Most contracts do not allow it after issue; the alternative is a new contract, with tax if non-registered
The annuitant is the measuring life and typically fixed. Successor annuitant provisions vary.
Why the other options are wrong
- AA change of annuitant is usually not permitted after issue.
- BA new contract may trigger tax on a non-registered disposition.
- CWritten amendments are required where a change is possible at all.
Exam tip
Annuitant usually fixed; successor annuitant at death if the contract allows.
Common mistake
Promising an annuitant change that the contract prohibits.
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 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
Timed sets weighted like the exam, and review of every question you miss. Free to start.