LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client asks what happens to her plan if she lives to a hundred. The analysis should show:
- AThat the plan ends at ninety, which is the maximum planning age insurers will accept
- BThat the registered plan's minimum withdrawals stop at ninety, preserving the balance
- CThat government pensions increase automatically after the age of ninety to fill any remaining gap
- Whether income continues for life, or whether the capital would be exhausted before that age
Correct answer: D) Whether income continues for life, or whether the capital would be exhausted before that age
Longevity is the risk the client cannot diversify away, and the plan either produces income that cannot run out or shows the age at which the capital would be gone.
Why the other options are wrong
- APlanning to ninety is a convention, not a limit insurers impose.
- BMinimum withdrawals continue for as long as the plan exists.
- CGovernment pensions do not increase at an advanced age.
Exam tip
Test the plan at an advanced age, not at the average.
Common mistake
Ending a retirement projection at life expectancy.
What this tests
CISRO competency component 1.3 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
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