LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
An advantage of segregated funds for estate planning where a will is contested is:
- ANone, since a contested will freezes every asset the deceased held, including insurance contracts
- The death benefit passes by designation outside the will, avoiding the litigation and delay
- CThe executor controls it, so the beneficiary receives it as soon as the executor is confirmed
- DThe court decides who receives it, along with the rest of the estate, once the contest is resolved
Correct answer: B) The death benefit passes by designation outside the will, avoiding the litigation and delay
Designated proceeds sit outside the estate (with some provincial exceptions for dependants' relief claims).
Why the other options are wrong
- ABypassing the estate is a real advantage.
- CThe executor has no role in designated proceeds.
- DCourts rarely intervene in valid designations.
Exam tip
Designated proceeds sit outside will disputes (mostly).
Common mistake
Claiming designations are immune from every claim, including dependants' relief.
What this tests
CISRO competency component 2.2 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.