LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client wants to leave assets to children privately and quickly, avoiding probate delays and fees. The need points to:
- AJoint ownership with each child, so the assets pass by survivorship without any formal process
- BA will only, since a properly drafted will avoids probate in most provinces
- CHolding cash outside the financial system, so nothing has to be reported or probated
- Products that pass by beneficiary designation outside the estate
Correct answer: D) Products that pass by beneficiary designation outside the estate
Probate bypass is a distinctive benefit of insurance contracts. The death benefit is paid directly to the named beneficiary, privately.
Why the other options are wrong
- AJoint ownership carries its own tax and control risks.
- BAssets passing under a will go through probate.
- CImpractical, insecure and not a plan.
Exam tip
Probate avoidance → beneficiary designations on seg funds and registered plans.
Common mistake
Failing to mention that probate bypass requires a named (non-estate) beneficiary.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.