LLQP Segregated Funds & Annuities · Component 4.1 · 10% of the exam
A client wants to transfer ownership of a non-registered segregated fund to her adult child. The agent should explain:
- AIt is prohibited, since a segregated fund contract cannot be assigned to anyone other than a spouse
- The transfer is an assignment and a deemed disposition at fair market value, affecting designations and protection
- CIt is free of tax, since a gift between family members is not treated as a disposition
- DIt requires medical evidence on the child, since the death benefit will now be measured on a new life and must be underwritten again
Correct answer: B) The transfer is an assignment and a deemed disposition at fair market value, affecting designations and protection
Ownership changes have tax and contractual effects. Registered plans are personal and non-transferable.
Why the other options are wrong
- ANon-registered contracts can be assigned.
- CA deemed disposition applies at fair market value.
- DAn ownership transfer requires no medical evidence.
Exam tip
Ownership transfer: assignment form, deemed disposition, designation review.
Common mistake
Telling a client an ownership transfer has no tax effect.
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 wants to replace the beneficiary on a contract where the current designation was made irrevocable. The agent must explain that:
- A client who has lost her job asks to pause her pre-authorized monthly contributions for six months. The agent should:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.