LLQP Segregated Funds & Annuities · Component 4.1 · 10% of the exam
A client wants to replace the beneficiary on a contract where the current designation was made irrevocable. The agent must explain that:
- Athe designation becomes revocable automatically after five years have passed since it was made
- Bonly a court order can alter an irrevocable designation under any circumstances whatever
- Cthe change can be made at any time, since the contract holder always controls the designation
- the irrevocable beneficiary must consent in writing before the designation can be changed
Correct answer: D) the irrevocable beneficiary must consent in writing before the designation can be changed
An irrevocable designation gives the beneficiary a vested interest. The holder loses the ability to change it, to withdraw or to use the contract as collateral without that person's written consent, which is why it is used deliberately.
Why the other options are wrong
- AIrrevocable designations do not expire after any period of time.
- BWritten consent from the beneficiary is the normal route, not a court order.
- CThe whole point of an irrevocable designation is that the holder loses that control.
Exam tip
Irrevocable means the beneficiary must consent to changes, withdrawals and collateral use.
Common mistake
Recording a designation as irrevocable without explaining what the client gives up.
What this tests
CISRO competency component 4.1 — Provide customer service during the validity period of the coverage — which is weighted at 10% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 4
- A client's daughter was born last month and the client wants her added to the segregated fund designation. The agent should:
- A client wants to withdraw part of his segregated fund before maturity. The agent should explain:
- A client's segregated fund contract is approaching its maturity date. The insurer will:
- A client asks to add her adult son as a joint owner of her non-registered segregated fund contract. The agent should explain that:
- A client who has lost her job asks to pause her pre-authorized monthly contributions for six months. The agent should:
- A client is considering replacing her existing segregated fund contract with one from another insurer. Before any replacement the agent must:
Practice the whole Segregated Funds & Annuities module
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