LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
A client aged seventy is buying an annuity with savings and is married to a spouse aged sixty. The design that best protects the household income is:
- Aa term-certain annuity to age eighty, which pays for a defined period and then stops entirely
- Ba deferred annuity beginning at age eighty-five, leaving the couple without income until then
- Ca straight life annuity on the client's own life, which produces the highest monthly payment
- a joint and last survivor annuity, which continues payments while either spouse is alive
Correct answer: D) a joint and last survivor annuity, which continues payments while either spouse is alive
A joint and last survivor annuity continues until the second death, which protects a younger spouse likely to live many years longer. The payment is lower than a single life annuity because the insurer expects to pay for longer.
Why the other options are wrong
- AA term-certain annuity ends on a fixed date whether or not either spouse is still living.
- BA long deferral leaves the couple with no income during the years they need it most.
- CA single life annuity stops at the client's death, leaving the younger spouse with nothing.
Exam tip
A much younger spouse almost always points to a joint and last survivor design.
Common mistake
Choosing the highest payment quote without checking who depends on the income.
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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