LLQP Segregated Funds & Annuities · Component 4.1 · 10% of the exam
A client asks to switch from an equity fund to a money market fund within her contract during a market decline. The agent should:
- ADecline the switch, since selling in a decline locks in losses that the guarantee would otherwise have covered at the maturity date
- Discuss whether the move fits her profile or is a panic reaction, note the guarantee is unaffected, and document
- CReset the guarantee before switching, so the current value is locked in ahead of the move
- DExecute the switch without comment, since the client is entitled to allocate her contract as she wishes
Correct answer: B) Discuss whether the move fits her profile or is a panic reaction, note the guarantee is unaffected, and document
Service includes counsel against behavioural mistakes while respecting the client's decision.
Why the other options are wrong
- AThe client may switch; the agent advises but does not refuse.
- CA reset is irrelevant in a decline; there is nothing to lock in.
- DAdvice is warranted before executing a panic switch.
Exam tip
Panic switches: counsel, explain, document.
Common mistake
Enabling market timing without discussion.
What this tests
CISRO competency component 4.1 — Provide customer service during the validity period of the coverage — which is weighted at 10% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 4
- A client's daughter was born last month and the client wants her added to the segregated fund designation. The agent should:
- A client wants to withdraw part of his segregated fund before maturity. The agent should explain:
- A client's segregated fund contract is approaching its maturity date. The insurer will:
- A client asks to add her adult son as a joint owner of her non-registered segregated fund contract. The agent should explain that:
- A client wants to replace the beneficiary on a contract where the current designation was made irrevocable. The agent must explain that:
- A client who has lost her job asks to pause her pre-authorized monthly contributions for six months. The agent should:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.