LLQP Segregated Funds & Annuities · Component 4.1 · 10% of the exam
A client is considering replacing her existing segregated fund contract with one from another insurer. Before any replacement the agent must:
- Aproceed immediately, since a client is free to change insurers without any formality
- complete the required replacement disclosure comparing the existing and proposed contracts
- Carrange the new contract first and cancel the old one only after the client has complained
- Dobtain written permission from the existing insurer before discussing any alternative product
Correct answer: B) complete the required replacement disclosure comparing the existing and proposed contracts
Replacement rules require a written comparison so the client can see what is gained and lost, including guarantees, fees, charges, maturity dates and any tax consequences. The disclosure goes to the client and to both insurers.
Why the other options are wrong
- AReplacements carry specific disclosure obligations precisely because clients can be harmed.
- CCancelling only after a complaint reverses the proper order entirely.
- DThe existing insurer's permission is not required, though it must be notified.
Exam tip
Every replacement needs a written comparison before the client decides.
Common mistake
Treating a move between insurers as an ordinary new sale.
What this tests
CISRO competency component 4.1 — Provide customer service during the validity period of the coverage — which is weighted at 10% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 4
- A client's daughter was born last month and the client wants her added to the segregated fund designation. The agent should:
- A client wants to withdraw part of his segregated fund before maturity. The agent should explain:
- A client's segregated fund contract is approaching its maturity date. The insurer will:
- A client asks to add her adult son as a joint owner of her non-registered segregated fund contract. The agent should explain that:
- A client wants to replace the beneficiary on a contract where the current designation was made irrevocable. The agent must explain that:
- A client who has lost her job asks to pause her pre-authorized monthly contributions for six months. The agent should:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.