LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client asks whether a segregated fund's guarantee is worth it if she plans to withdraw gradually over 20 years. The honest analysis is:
- AYes, since the guarantee protects every withdrawal against a decline in the fund's value
- Interim withdrawals are at market value and reduce the guarantee, so a GMWB or annuity fits better
- CShe should never withdraw from the contract, since any withdrawal permanently damages the guarantee
- DGuarantees are irrelevant to her, since a client who plans to withdraw has no use for any insurance feature at all
Correct answer: B) Interim withdrawals are at market value and reduce the guarantee, so a GMWB or annuity fits better
Matching the guarantee type to the withdrawal pattern is a subtle but essential recommendation point.
Why the other options are wrong
- AWithdrawals are unprotected by the maturity guarantee.
- CWithdrawals are her plan; the product should fit it.
- DThe right guarantee type matters.
Exam tip
Gradual withdrawals → GMWB/annuity, not maturity guarantee.
Common mistake
Selling a maturity guarantee to a systematic withdrawer.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.