LLQP Ethics & Professional Practice · Component 1.4 · 60% of the exam
The 'segregated fund' contract provisions include:
- AThe agent's commission on deposits and the trailer fees paid for servicing the contract each year for as long as it remains in force
- BA guaranteed rate of return on deposits, since the contract is issued by a life insurer rather than a fund company
- COnly the names of the funds available, since the guarantees are set out in the information folder
- The maturity and death guarantees, their reduction on withdrawal, resets, fees, parties, maturity options and rescission
Correct answer: D) The maturity and death guarantees, their reduction on withdrawal, resets, fees, parties, maturity options and rescission
Seg fund contracts are individual variable insurance contracts; their provisions combine insurance and investment features.
Why the other options are wrong
- AThe agent's commission is not a contract provision.
- BSegregated fund contracts never guarantee a rate of return.
- CThe contract sets out far more than fund names.
Exam tip
Seg fund provisions: guarantees, resets, fees, roles, maturity, fundamental change, rescission.
Common mistake
Not explaining how withdrawals reduce guarantees.
What this tests
CISRO competency component 1.4 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
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