LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client in good health with long-lived parents asks how long his retirement income must last. The planning response is:
- AUntil his registered plan matures, after which government pensions provide for the rest
- BTwenty years from retirement, which is the standard planning period for every client
- CTo life expectancy, since planning beyond the average would be unnecessarily conservative and costly
- Well beyond average life expectancy, since half of a cohort outlives it and family history matters
Correct answer: D) Well beyond average life expectancy, since half of a cohort outlives it and family history matters
Planning to an average leaves a coin-flip chance of outliving the money, and a client with favourable health and family history sits above the average to begin with.
Why the other options are wrong
- AGovernment pensions rarely cover a retiree's full costs.
- BA fixed twenty-year rule ignores the client's own circumstances.
- CPlanning to the average leaves a large probability of a shortfall.
Exam tip
Plan past the average, not to it.
Common mistake
Building an income plan that ends 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
Timed sets weighted like the exam, and review of every question you miss. Free to start.