LLQP Segregated Funds & Annuities · Component 2.4 · 30% of the exam
A 'capital accumulation plan' (CAP) is:
- AA bank account into which an employer deposits a share of profits each year for the employee
- A tax-assisted group plan where members choose investments and bear the risk, under CAP Guidelines
- CAn annuity purchased by an employer to provide guaranteed lifetime income to retirees
- DA defined benefit pension in which the sponsor accumulates capital to pay a formula benefit at the member's retirement
Correct answer: B) A tax-assisted group plan where members choose investments and bear the risk, under CAP Guidelines
CAP Guidelines set expectations for investment options, education, and disclosure. Agents working with group plans must know them.
Why the other options are wrong
- AIt is a group retirement plan, not a bank account.
- CAnnuities are income products, not accumulation plans.
- DDB plans are not capital accumulation plans.
Exam tip
CAP = member-directed group plan; CAP Guidelines govern.
Common mistake
Treating a DC pension as if the sponsor guarantees returns.
What this tests
CISRO competency component 2.4 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.