LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A 45-year-old with a 20-year horizon, growth objective and moderate risk tolerance, who wants some protection at retirement, is most suitably recommended:
- AAn immediate annuity, since locking in lifetime income twenty years early removes all of the investment risk
- An equity-oriented balanced fund with a 75/100 or 100/100 guarantee maturing near retirement, using resets
- CA money market fund with a 100/100 guarantee, since the protection at retirement is what matters most to him
- DA term-certain annuity to age 65, so that the payments arrive exactly when retirement begins
Correct answer: B) An equity-oriented balanced fund with a 75/100 or 100/100 guarantee maturing near retirement, using resets
Growth with a floor at retirement is the seg fund's signature use. The maturity date should coincide with the need date.
Why the other options are wrong
- AAnnuities are for income, not accumulation at 45.
- CA money market fund needs no guarantee and cannot grow.
- DA term-certain annuity is an income product unsuited to accumulation at 45.
Exam tip
Growth + floor at retirement → equity/balanced seg fund, guarantee maturing at retirement, resets.
Common mistake
Setting the maturity date at 15 years when retirement is 20 years out and losing the timing benefit.
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.