LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
For a client whose objective is to pass wealth to grandchildren while the parents are alive, the recommendation may use:
- Naming the grandchildren, with trustees if minors, as beneficiaries on segregated funds, skipping probate
- BNothing beyond the will, since assets cannot pass to grandchildren while their parents are still alive
- CNaming the estate, so the executor can distribute to the grandchildren according to the will
- DNaming the parents as beneficiaries, since they will pass the money on to their own children in due course
Correct answer: A) Naming the grandchildren, with trustees if minors, as beneficiaries on segregated funds, skipping probate
Direct designations achieve generation-skipping transfer simply. Trustees are required for minors.
Why the other options are wrong
- BDirect designations to grandchildren are a straightforward option.
- CNaming the estate brings probate and estate exposure.
- DNaming the parents defeats the objective.
Exam tip
Generation-skipping: name grandchildren; trustee for minors.
Common mistake
Naming minors without a trustee.
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.