LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client's 'estate objectives' affect segregated fund recommendations because:
- Beneficiary designations bypass probate, creditor protection may apply, and death guarantees pay
- BSegregated funds can only be sold where the client's primary objective is transferring an estate
- CEstate goals require annuities, since only an annuity can guarantee what the heirs will receive
- DThey do not, since estate matters are handled by the will rather than by the investment contract
Correct answer: A) Beneficiary designations bypass probate, creditor protection may apply, and death guarantees pay
The insurance contract structure gives segregated funds estate features mutual funds lack. Profiling should capture estate objectives.
Why the other options are wrong
- BSegregated funds serve many objectives, not estate goals alone.
- CAnnuities serve income goals; they are a poor bequest vehicle.
- DEstate goals are a primary reason clients choose segregated funds over mutual funds.
Exam tip
Estate objectives → beneficiary designation, probate bypass, death guarantee.
Common mistake
Failing to ask about estate objectives when the client is older.
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
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