10.2 Implementing the Recommendation: Applications, Forms & Group Set-Up
Key Takeaways
The client provides the information on the application; the agent may complete it on paper or electronically, and the client's social insurance number is required for tax slips.
In a registered contract the owner must be the annuitant (for a spousal RRSP, the annuitant spouse), while a non-registered contract can have a different owner, annuitant and beneficiary.
Federal anti-money-laundering rules require the insurer and agent to verify the client's identity and record third-party and source-of-funds information.
The Information Folder and Fund Facts must be delivered and explained before the application; the confirmation that follows starts the two-business-day cancellation period.
For group plans, the sponsor's group administrator enrols members, provides member data, deducts and remits payroll contributions and works with the agent on an annual plan review.
Implementing the Recommendation
Once the client agrees, the agent must put the recommendation in place correctly. Errors here (a wrong owner, a missing beneficiary, an unsigned transfer form) can defeat the purpose of the product. The curriculum lists the requirements for individuals and for groups.
1. Individual Investor
| Requirement | What the agent does |
|---|---|
| Application form | The client provides the information; the agent may fill in the form on paper or electronically, but the answers are the client's. The client's social insurance number (SIN) is needed for tax reporting. |
| Rider election form | Records optional benefits chosen: guarantee class (75/75, 75/100, 100/100), resets, enhanced death benefits, guaranteed withdrawal benefits. |
| Beneficiary form | Names primary and contingent beneficiaries, whether each is revocable or irrevocable, and a trustee for any minor beneficiary. In Quebec, a married or civil union spouse named as beneficiary is irrevocable unless stated otherwise. |
| Correct form of account | Registered (RRSP, RRIF, TFSA, LIRA/LIF) or non-registered; single or joint ownership; successor owner or successor annuitant. |
| Client identification | Verify identity for account opening under the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act, record any third party, and note the source of funds. |
| Owner, annuitant and beneficiary | In a registered contract the owner must be the annuitant (in a spousal RRSP, the annuitant spouse owns the plan). A non-registered contract can have a different owner (for example a parent) and annuitant (the child). |
| Consideration (payment) | A cheque, pre-authorized deposits, or a transfer: for example, an RRSP or RRIF transfer from another institution on CRA Form T2033, or a LIRA transfer with the locked-in addendum required by the pension jurisdiction. |
| Delivery of the Information Folder and Fund Facts | Before the application, with the Key Facts, sales charge options and fees explained. |
| Determining fund value | Deposits buy units at the unit value on the valuation day; instructions received after the insurer's daily cut-off are processed on the next valuation day. |
| Notice of confirmation | The insurer sends a confirmation of the deposit; the client's two-business-day right to cancel runs from its receipt (deemed five business days after sending). The agent keeps signed and dated copies. |
Common Exam Traps
- Who completes the application? The client provides the information; the agent's role is to record it accurately.
- Can a parent own a child's RRSP? No. A registered contract's owner must be the annuitant.
- Can a non-registered contract have a different owner? Yes, and naming a successor owner keeps it out of the owner's estate if the owner dies first.
- When must the Fund Facts be delivered? Before the application, not with the contract.
2. Worked Example: Alex's Application
Alex, 25, invests $25,000 for retirement in a balanced segregated fund and $10,000 in an international fund, both inside his RRSP.
- Alex provides the application information himself and supplies his SIN.
- He must be both owner and annuitant of the RRSP contract; he cannot make his father the owner.
- As owner, he names his beneficiary.
- Money from a bank RRSP moves by direct transfer (Form T2033), so no tax is withheld.
- The agent delivers and explains the Information Folder and the two Fund Facts before he signs, records his identification, and keeps a copy of the confirmation.
3. Group Plans
| Requirement | What it involves |
|---|---|
| Role of the group administrator | The employer's plan administrator (often HR or payroll) enrols members, maintains records, deducts and remits contributions, and is the insurer's day-to-day contact. |
| Data from the group administrator | An employee census: names, dates of birth, hire dates, earnings, province of employment, classes of employees. The insurer uses it to set up the plan and member accounts. |
| Documentation to group members | Enrolment kits, plan booklets, descriptions of investment options and fees, beneficiary forms and online decision tools, as CAPSA Guideline No. 3 expects. |
| Application form | The sponsor signs the master application or plan agreement; each member completes an enrolment form (and investment and beneficiary elections). |
| Payroll contributions | Employee and employer contributions are deducted from pay and remitted to the insurer on schedule (pension standards laws set remittance deadlines for registered pension plans). |
| Eligibility of members | Who can join and when: classes of employees, waiting periods and any mandatory participation rules. |
| Need for annual review | The agent and sponsor review participation, fees, fund performance and the default option, and whether the plan still meets the sponsor's goals. |
4. The Implementation Checklist
- Recommendation accepted in writing, with reasons recorded.
- Information Folder and Fund Facts delivered and explained (dated).
- Identity verified and source of funds noted.
- Ownership, annuitant, beneficiaries, successor owner or annuitant confirmed.
- Riders and guarantee class elected.
- Payment or transfer forms completed and signed.
- Confirmation received; cancellation right explained.
- Follow-up scheduled to deliver the contract and review it with the client.
5. Anti-Money-Laundering Duties in Practice
Life insurers are reporting entities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. For segregated fund and annuity sales, that means in practice:
- Verify identity with acceptable documents or methods before or at the time of the transaction, and record the details.
- Determine third parties: ask whether the client is acting for someone else, and record who.
- Note the source of funds, especially for large deposits.
- Report suspicious transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), and large cash transactions of $10,000 or more.
- Keep records so the insurer and regulators can review them.
An agent who cannot verify identity or who sees signs of a suspicious transaction should not complete the sale and should follow the insurer's compliance procedures.
Which statement about completing a segregated fund application is correct?
The agent may answer the application questions based on the agent's own knowledge of the client
The client provides the information, and the client's social insurance number is required for tax reporting
The client's SIN is optional, because segregated funds are insurance contracts
Any family member can sign the application for the client if the agent agrees
Liam, 30, wants to open an RRSP segregated fund contract and asks whether his mother can be named the owner so she can manage it. What should the agent tell him?
Yes, any adult can be the owner of an RRSP contract on another person's life
Yes, but only if his mother is also named the irrevocable beneficiary
No, the owner of a registered RRSP contract must be the annuitant, so Liam must own it
No, his mother can only be the owner of a TFSA, not an RRSP
In a group retirement plan, who normally deducts contributions from employees' pay and remits them to the insurer?
The life insurance agent who sold the plan
The group administrator acting for the plan sponsor
Each member, by sending a cheque to the insurer every month
The provincial pension regulator
Sections you finish are checked off in the contents.