LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client wants to leave a segregated fund death benefit to a son who receives provincial disability benefits. The agent should:
- Aname the son directly as beneficiary, since a named designation avoids probate and delay
- Badvise the client to leave him nothing, because any inheritance will end his entitlement
- Cname the client's estate instead, since benefits are never affected by an estate distribution
- explain that a direct payment may affect his benefits and recommend legal advice on a trust
Correct answer: D) explain that a direct payment may affect his benefits and recommend legal advice on a trust
A lump sum paid directly can disqualify a beneficiary from income or asset tested programs. A properly drafted trust is the usual solution, and drafting one is a matter for a lawyer rather than the insurance agent.
Why the other options are wrong
- AA direct designation is exactly what may put the provincial benefits at risk.
- BDisinheriting the son is neither necessary nor what the client has asked for.
- CMoney received through an estate can affect benefits in the same way.
Exam tip
Beneficiary on assistance equals flag the issue and refer the trust drafting to a lawyer.
Common mistake
Naming a beneficiary on provincial assistance without considering the effect on benefits.
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.