LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client's health status may be relevant to an annuity recommendation because:
- Life annuities pay for life, so poor health may mean less total value unless an impaired annuity is available
- BAnnuities require a medical examination, so a client in poor health may be declined
- CIt is not relevant, since annuity payments are fixed by age and sex rather than by health
- DHealth sets the management expense ratio, since insurers price the annuity's costs by mortality
Correct answer: A) Life annuities pay for life, so poor health may mean less total value unless an impaired annuity is available
Longevity expectations affect annuity value. Some insurers offer impaired (enhanced) annuities for poor health.
Why the other options are wrong
- BStandard annuities do not require medicals; only impaired annuities need evidence.
- CHealth affects the economics of a lifetime payment stream.
- DMERs are fund features; annuities do not have them.
Exam tip
Health and family longevity affect annuity suitability; ask about impaired annuities.
Common mistake
Recommending a life annuity without guarantee period to a client in poor health.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.