LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client asks whether she can change her mind after buying a segregated fund. The agent should explain:
- AShe cannot change her mind once the application is signed, since an insurance contract is binding from that moment
- BShe can cancel at any time and recover her full deposit, since the guarantee protects the amount invested
- CShe can cancel only at the maturity date, when the guarantee is applied and the contract can be closed
- The rescission right, then withdrawal at market value with charges and guarantee reduction, unlike an annuity in payment
Correct answer: D) The rescission right, then withdrawal at market value with charges and guarantee reduction, unlike an annuity in payment
Clarifying liquidity and rescission is part of informed recommendation.
Why the other options are wrong
- ARescission and withdrawals exist.
- BAfter rescission, market value applies.
- CWithdrawals are available before maturity.
Exam tip
Rescission window; then market value withdrawals; annuities in payment irrevocable.
Common mistake
Failing to distinguish seg fund liquidity from annuity irrevocability.
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.