LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
A 'cash refund' or 'instalment refund' annuity:
- AHas no death benefit, since the refund feature applies only to surrenders during life
- BRefunds the premium on request at any time, less the payments already received, without any penalty or charge
- CPays double the regular payment to the beneficiary for the balance of the guarantee period
- Pays the beneficiary any shortfall between payments received and the premium if the annuitant dies early
Correct answer: D) Pays the beneficiary any shortfall between payments received and the premium if the annuitant dies early
Refund features are alternatives to fixed guarantee periods, ensuring at least the premium is returned in total.
Why the other options are wrong
- AIt has a premium-based death benefit.
- BA refund annuity does not refund premiums on request; it pays a shortfall at death.
- CIt refunds the shortfall only, not double payments.
Exam tip
Refund annuity: total payments at least equal the premium.
Common mistake
Confusing a refund feature with a cash surrender right.
What this tests
CISRO competency component 2.3 — 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
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