LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client intends to leave a specific amount to a grandchild and the rest to charity. The profile should record:
- AThat the client should hold everything in cash so the amounts can be divided precisely
- Estate objectives with identified recipients, since designations and structures follow from them
- CThat charitable gifts must be made during the client's lifetime, since an estate cannot make a donation
- DOnly the total portfolio value, since how it is divided is a matter for the client's will
Correct answer: B) Estate objectives with identified recipients, since designations and structures follow from them
Knowing who is to receive what determines whether beneficiary designations, trusteeship or a settlement option belong in the recommendation.
Why the other options are wrong
- AHolding cash sacrifices growth for a precision the client did not ask for.
- CEstates make charitable gifts routinely and receive a credit for them.
- DA will does not govern contracts that pass by designation.
Exam tip
Named recipients drive the designation strategy.
Common mistake
Recording an estate objective without recording who is to receive what.
What this tests
CISRO competency component 1.1 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
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