In the LLQP Segregated Funds and Annuities curriculum, a client’s net worth is determined using a net worth statement, which is a snapshot of financial position calculated by listing all assets at their market value and subtracting all liabilities. The manual provides the direct formula: Net worth = value of all assets – value of all liabilities. It further explains that assets are anything owned that has cash value (including the home, savings, and the cash value of life insurance), while liabilities are debts and financial obligations that must be repaid.
Applying those LLQP rules to Irma:
Assets include (1) condo at market value $372,000, (2) savings $22,000, and (3) whole life insurance cash value $133,000. The Segregated Funds and Annuities text explicitly treats life insurance with cash value as an asset because the value can be accessed (cash surrender value or policy loan). Therefore, the correct value to include in net worth is the cash value, not the death benefit. Total assets = 372,000 + 22,000 + 133,000 = $527,000.
Liabilities include (1) reverse mortgage $90,000 and (2) income tax owing $1,070. The manual specifically identifies a reverse mortgage as a liability that must be repaid when the home is sold or at death. Total liabilities = 90,000 + 1,070 = $91,070.
Therefore, Irma’s net worth is:
$527,000 − $91,070 = $435,930, which matches Option B.
