LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A client's contract has a maturity date that falls three years before he plans to retire. In the review this means:
- AThe guarantee is void because the maturity date does not match his retirement date
- The guarantee will apply at a point when he does not need the money, and his options at that date should be planned
- CThe contract terminates on that date and the proceeds are paid out automatically in cash
- DHe must retire on the maturity date in order to receive the guaranteed amount
Correct answer: B) The guarantee will apply at a point when he does not need the money, and his options at that date should be planned
A mismatch is not fatal, but the client needs to know what happens at maturity and whether renewing, resetting or annuitizing best serves the plan.
Why the other options are wrong
- AA mismatch in dates does not void anything.
- CCash is one option at maturity, not an automatic outcome.
- DThe guarantee does not depend on the client's employment status.
Exam tip
Plan the maturity election before the notice arrives.
Common mistake
Letting a default maturity election take effect unexamined.
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.