LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client with a large registered balance and no spouse is concerned about the tax at death. The recommendation may include:
- Gradual drawdown in lower-income years, named beneficiaries for probate bypass, and possibly insurance for the tax
- BNaming the estate as beneficiary, since the estate can then pay the tax from the proceeds before distribution
- CSetting the concern aside, since the tax is paid by the estate and does not affect the client during her lifetime
- DCashing out the plan now, since paying the tax at today's rates avoids a larger bill at death
Correct answer: A) Gradual drawdown in lower-income years, named beneficiaries for probate bypass, and possibly insurance for the tax
Registered plan tax at death without a spouse is unavoidable but can be smoothed and funded.
Why the other options are wrong
- BNaming the estate loses probate bypass.
- CThe liability is large and can be planned for.
- DCashing out maximizes immediate tax.
Exam tip
No-spouse RRIF: smooth withdrawals, name beneficiaries, fund the tax.
Common mistake
Telling a client that naming a beneficiary avoids income tax on the RRIF.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.