LLQP Segregated Funds & Annuities · Component 4.2 · 10% of the exam
A segregated fund's death benefit is paid to a named beneficiary but the deceased's creditors claim it. The agent should explain:
- AThe beneficiary must pay the debts from the proceeds, since the money was the deceased's property at death
- Proceeds to a named beneficiary generally fall outside the estate and its creditors, with exceptions; legal advice may help
- CThe insurer decides the dispute between the beneficiary and the creditors and pays whichever party it favours after its own review
- DCreditors always win, since debts must be settled before any beneficiary can receive a death benefit
Correct answer: B) Proceeds to a named beneficiary generally fall outside the estate and its creditors, with exceptions; legal advice may help
Protection from estate creditors is a core benefit; limits exist. Legal referral is appropriate in disputes.
Why the other options are wrong
- AThe proceeds are generally not available to estate creditors.
- CCourts decide disputes; insurers may pay into court.
- DNamed beneficiaries are generally protected.
Exam tip
Named beneficiary proceeds: outside the estate; limited exceptions.
Common mistake
Promising absolute immunity from all claims.
What this tests
CISRO competency component 4.2 — 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.