LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A client's employer sponsors a group segregated fund plan (group RRSP with seg funds). The assessment should note:
- AThat it has no guarantees at all, since group contracts are priced without an insurance element
- BThat it is tax-free, since employer-sponsored plans enjoy the same treatment as a TFSA
- CThat it is a defined benefit plan, since the insurer stands behind the value of the units
- Whether guarantees apply in the group context, the negotiated fees, and the options and default fund
Correct answer: D) Whether guarantees apply in the group context, the negotiated fees, and the options and default fund
Group plans often use segregated funds as investment vehicles with institutional pricing and different guarantee terms. The curriculum lists group retirement and investment plans.
Why the other options are wrong
- AGuarantees may exist in a modified form; the terms must be checked.
- BA group RRSP with segregated funds is still an RRSP; withdrawals are taxable.
- CIt is a capital accumulation plan, not a defined benefit pension.
Exam tip
Group seg funds: check guarantees, fees, options, default.
Common mistake
Assuming retail guarantee terms apply in a group plan.
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
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