LLQP (Life Licence Qualification Program) Practice Exam · Question
A client dies holding a segregated fund with a named beneficiary. What is a key advantage regarding the payout of these funds?
The IVIC (Individual Variable Insurance Contract) also provides for 'probate bypass' if a beneficiary is named, meaning the funds go directly to the beneficiary
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Question: A client dies holding a segregated fund with a named beneficiary. What is a key advantage regarding the payout of these funds?
Answer options:
- The death benefit is taxable as a capital gain to the beneficiary.
- The proceeds must go through the deceased's estate first.
- The death benefit is subject to a 50% withholding tax. ✅ The proceeds are paid directly to the beneficiary, bypassing probate.
Correct answer: The proceeds are paid directly to the beneficiary, bypassing probate.
Explanation: The IVIC (Individual Variable Insurance Contract) also provides for 'probate bypass' if a beneficiary is named, meaning the funds go directly to the beneficiary rather than through the estate. This is true for both life insurance and segregated funds.
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- A life insurance policy that offers lifelong coverage, a guaranteed death benefit, and a savings component tha
- Group benefits in Canada commonly include:
- Sarah, a 35-year-old marketing professional in Ontario, purchases a participating whole life insurance policy
- Mark, a 45-year-old business owner in British Columbia, has a Universal Life policy with a Level Cost of Insur
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