LLQP Segregated Funds & Annuities · Component 4.1 · 10% of the exam
A client wishes to designate her segregated fund to pay by settlement option (instalments) to her son at her death. The amendment requires:
- AA new contract with the son as owner, since a settlement option cannot be added to an existing contract once it has been issued
- The insurer's settlement option form signed by the owner, with an explanation of the beneficiary's limited rights
- CThe son's signature on the election, since he is the person whose payments are being restricted
- DNothing formal, since the owner can leave written instructions with the will for the executor to follow
Correct answer: B) The insurer's settlement option form signed by the owner, with an explanation of the beneficiary's limited rights
Settlement options are owner elections recorded with the insurer.
Why the other options are wrong
- AAn amendment to the existing contract suffices.
- CThe owner, not the son, makes the settlement option election.
- DA settlement option election requires the insurer's form.
Exam tip
Settlement option: owner's election form.
Common mistake
Assuming a settlement option can be added informally.
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
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