LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
A client wants to name her brother as an irrevocable beneficiary to strengthen creditor protection. An irrevocable designation means:
- ANothing changes for the owner during life, since the designation only affects what happens after the annuitant's death
- BThe beneficiary becomes the owner of the contract and may direct the investments
- The owner cannot change the beneficiary, withdraw or assign without the beneficiary's consent
- DThe owner keeps full control, and the designation simply cannot be changed by a will
Correct answer: C) The owner cannot change the beneficiary, withdraw or assign without the beneficiary's consent
Irrevocable designations are powerful and restrictive. They suit specific situations (creditor protection, family law) but must be explained carefully.
Why the other options are wrong
- AIt materially restricts the owner's rights during life.
- BOwnership remains with the owner.
- DControl is shared with the beneficiary.
Exam tip
Irrevocable = beneficiary consent for changes/withdrawals; strong creditor protection; loss of control.
Common mistake
Naming an irrevocable beneficiary without explaining the loss of control.
What this tests
CISRO competency component 2.2 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
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