LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client's age affects segregated fund suitability directly because:
- AAge is irrelevant, since the guarantees are the same for every contract holder regardless of age
- BAge sets the management expense ratio, since older holders pay more for the death guarantee
- COnly holders under a set age can buy, since the death guarantee is not offered past retirement
- Insurers set maximum issue ages for guarantee options and may reduce death guarantees at older ages
Correct answer: D) Insurers set maximum issue ages for guarantee options and may reduce death guarantees at older ages
Contract features are age-limited. An 80-year-old may face restricted guarantees or higher costs.
Why the other options are wrong
- AAge drives the availability and level of guarantees.
- BMERs are product-level and do not vary by holder age.
- CSegregated funds are sold at most ages within the insurer's limits.
Exam tip
Check issue age limits and guarantee reductions by age.
Common mistake
Promising a 100% death guarantee to a client above the insurer's age limit for it.
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.