LLQP Segregated Funds & Annuities · Component 4.2 · 10% of the exam
A client's daughter is both the executor of the estate and the named beneficiary of a segregated fund. The agent should explain that she:
- receives the proceeds personally as beneficiary, separately from her duties as executor
- Bmust obtain the consent of the other heirs before the insurer will release the proceeds
- Cmust add the proceeds to the estate because an executor cannot also be a beneficiary
- Dmay keep the proceeds only after all of the estate's debts have been settled in full
Correct answer: A) receives the proceeds personally as beneficiary, separately from her duties as executor
The two roles are distinct. As beneficiary she takes the proceeds outside the estate, which is why they bypass probate and are generally beyond the reach of the deceased's ordinary creditors.
Why the other options are wrong
- BOther heirs have no say over money that never forms part of the estate.
- CHolding both roles is common and does not invalidate the designation.
- DProceeds paid to a named beneficiary are not available to pay estate debts.
Exam tip
Beneficiary and executor are separate roles; the designation governs the proceeds.
Common mistake
Treating designated proceeds as estate assets because the beneficiary is the executor.
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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