LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client's health is poor and family longevity is short. The need analysis suggests:
- AMaximum annuitization, since a client in poor health needs guaranteed income more than anyone
- BSetting health aside, since annuity pricing depends on age and sex rather than on health
- That longevity risk is low, so annuitization is less compelling; consider a guarantee period or impaired annuity
- DA straight life annuity, since it pays the highest income and the client needs income now
Correct answer: C) That longevity risk is low, so annuitization is less compelling; consider a guarantee period or impaired annuity
Annuity value depends on longevity. Poor health reduces the case for standard annuities and raises the case for guarantees or impaired rates.
Why the other options are wrong
- APoor health argues against heavy annuitization.
- BHealth is central to annuity decisions.
- DA straight life annuity could pay little before death.
Exam tip
Poor health: guarantee periods, impaired annuity, or avoid annuitizing.
Common mistake
Ignoring health when recommending an annuity.
What this tests
CISRO competency component 1.3 — 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.