LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client wants her savings to pass to her children without the delay and cost of probate. The need points toward:
- Contracts that pass by beneficiary designation, paid directly to the named individuals
- BHolding everything in cash, so the estate can be distributed quickly without selling assets
- CA will naming the children, which directs the executor to distribute without court involvement
- DJoint ownership with each child, so the assets pass by survivorship at her death
Correct answer: A) Contracts that pass by beneficiary designation, paid directly to the named individuals
Insurance contracts with named beneficiaries bypass the estate entirely, which is the most direct answer to a probate objective.
Why the other options are wrong
- BCash in the client's name still passes through the estate.
- CAssets passing under a will are exactly what probate governs.
- DJoint ownership with adult children creates tax and control problems of its own.
Exam tip
Designations bypass probate; wills do not.
Common mistake
Adding a child as joint owner to avoid probate.
What this tests
CISRO competency component 1.3 — 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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