LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
A client asks when the maturity guarantee on a new deposit will actually apply. The maturity date is typically:
- AThe day the client retires, since the guarantee is designed to protect the retirement date
- A minimum period after deposit, often 10 or 15 years, or a set age, depending on the contract
- COne year from the deposit, after which the guarantee renews annually at the current value
- DWhenever the client chooses, since the holder may call the guarantee at any time on thirty days' written notice
Correct answer: B) A minimum period after deposit, often 10 or 15 years, or a set age, depending on the contract
Minimum holding periods are how insurers limit guarantee risk. Clients with shorter horizons will not benefit from the maturity guarantee.
Why the other options are wrong
- AOnly if chosen to coincide within contract rules.
- CGuarantees require long holding periods.
- DThe date is contractual, not at the client's option.
Exam tip
Maturity guarantee requires holding 10–15 years (contract-specific).
Common mistake
Selling a 15-year maturity guarantee to a 5-year investor.
What this tests
CISRO competency component 2.2 — 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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