LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client asks whether to take CPP at 60 and invest it. The recommendation should consider:
- AAlways deferring to 70, since the guaranteed increase for deferral cannot be beaten by any investment
- BNothing in particular, since the decision is the client's alone and outside the scope of investment advice
- CAlways taking it early, since money in hand today is worth more than a larger payment years from now
- The permanent reduction, her health, work status, need for income, and a break-even comparison with deferral
Correct answer: D) The permanent reduction, her health, work status, need for income, and a break-even comparison with deferral
CPP timing is an annuity-like decision. Deferral is a guaranteed, indexed 'return' that most investments cannot match for long-lived clients.
Why the other options are wrong
- ADeferral does not suit everyone.
- BIt is a major decision the agent should help with.
- CAn early start may cost a long-lived client heavily.
Exam tip
CPP timing: break-even, health, need, work status.
Common mistake
Advising early CPP to 'invest the difference' without the break-even math.
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.