LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A client receiving government income-tested benefits asks about drawing from her registered plan. The review should flag:
- That withdrawals raise net income and can reduce income-tested benefits she currently receives
- BThat income-tested benefits are recalculated only once, at the time of the first application
- CThat she must exhaust her registered plan entirely before any income-tested benefit becomes payable
- DThat registered withdrawals are excluded from the income test for every government benefit
Correct answer: A) That withdrawals raise net income and can reduce income-tested benefits she currently receives
Income-tested benefits fall as net income rises, so the order and timing of withdrawals can matter more to a modest-income retiree than the investment return.
Why the other options are wrong
- BEntitlement is recalculated as income changes.
- CNo benefit requires savings to be exhausted first.
- DRegistered withdrawals are ordinary income for the test.
Exam tip
For a low-income retiree, withdrawal order can beat investment return.
Common mistake
Recommending registered withdrawals without checking income-tested benefits.
What this tests
CISRO competency component 1.2 — 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.