LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client wants creditor protection through a segregated fund. The recommendation should specify:
- ANaming a trusted friend revocably, since any named beneficiary keeps the contract outside the reach of creditors
- BLeaving the beneficiary blank, since an unnamed beneficiary cannot be identified by a creditor
- A family-class or irrevocable beneficiary, with the caution that deposits to defeat known creditors are not protected
- DNaming the estate, since the estate's assets are protected until the executor distributes them
Correct answer: C) A family-class or irrevocable beneficiary, with the caution that deposits to defeat known creditors are not protected
The designation determines whether protection exists. Timing and intent limit it.
Why the other options are wrong
- ANon-family revocable designations do not qualify.
- BNo designation means the estate, which loses protection.
- DEstate designation loses protection.
Exam tip
Creditor protection = qualifying designation + clean timing.
Common mistake
Promising protection with a revocable non-family beneficiary.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.