LLQP Segregated Funds & Annuities · Component 4.2 · 10% of the exam
A TFSA segregated fund with the spouse as successor holder, at death:
- AMust be cashed and paid to the spouse, since a TFSA ends at the holder's death
- BIs fully taxed on the deceased's final return, in the same way as an RRSP or RRIF
- Continues as the spouse's TFSA without using their room; a mere beneficiary would receive a payout instead
- DGoes through probate, since a TFSA is not an insurance contract and cannot pass by designation to anyone including a spouse
Correct answer: C) Continues as the spouse's TFSA without using their room; a mere beneficiary would receive a payout instead
Successor holder is the superior designation for a spouse on a TFSA. The claim process differs accordingly.
Why the other options are wrong
- AContinuation is available to a successor holder.
- BTFSA proceeds are tax-free.
- DA TFSA with a successor holder passes without probate.
Exam tip
TFSA: successor holder continues; beneficiary receives cash.
Common mistake
Confusing beneficiary and successor holder at claim time.
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
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