LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client intends to spend several months a year in another country after retiring. For the profile this raises:
- Currency exposure on her future spending, and the practicalities of servicing the contract abroad
- BAn automatic loss of the contract's guarantees once she is outside Canada for six months
- CA requirement to hold the contract with an insurer licensed in the destination country
- DNothing of consequence, since a Canadian contract pays in Canadian dollars wherever the holder lives
Correct answer: A) Currency exposure on her future spending, and the practicalities of servicing the contract abroad
A retiree whose costs are partly in a foreign currency carries an exposure the portfolio should acknowledge, and administration at a distance is a real service consideration.
Why the other options are wrong
- BGuarantees do not lapse because the holder travels.
- CA Canadian insurer continues to service a Canadian contract.
- DPaying in Canadian dollars is the problem when the spending is not in Canadian dollars.
Exam tip
Match the currency of the money to the currency of the spending.
Common mistake
Ignoring where a retired client will actually be spending.
What this tests
CISRO competency component 1.1 — 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.