LLQP Segregated Funds & Annuities · Component 3.2 · 25% of the exam
A client's deposit cheque bounces after units were allocated. The insurer will typically:
- AKeep the units allocated and wait for the client to replace the payment, since the contract has already been issued
- BTake no action, since a failed payment is a matter between the client and the client's bank
- Reverse the transaction, with the client bearing any loss from the price change, and possibly charge a fee
- DPay the client any gain on the units, since the allocation was made in good faith on the insurer's records
Correct answer: C) Reverse the transaction, with the client bearing any loss from the price change, and possibly charge a fee
Reversal risk falls on the client. Verifying funds avoids it.
Why the other options are wrong
- AThe insurer reverses the units when the cheque fails.
- BThe insurer does not ignore a failed payment.
- DLosses, not gains, pass to the client.
Exam tip
NSF: reversal at client's cost.
Common mistake
Not confirming available funds before submitting.
What this tests
CISRO competency component 3.2 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.