LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client's need for 'flexibility' — the ability to change income and access capital — argues against:
- ATFSAs, since the contribution room rules make it costly to withdraw and recontribute
- Irrevocable life annuities, which fix income and give up capital
- CRRIFs, since the minimum withdrawal schedule prevents the client from varying income
- DSegregated funds, since the guarantees prevent withdrawals before the maturity date
Correct answer: B) Irrevocable life annuities, which fix income and give up capital
Flexibility and guarantee trade off. Annuities give certainty at the cost of flexibility.
Why the other options are wrong
- ATFSAs are highly flexible.
- CRRIFs are flexible above the minimum.
- DSegregated funds allow withdrawals at market value.
Exam tip
Flexibility need → avoid full annuitization.
Common mistake
Annuitizing a client who expects variable expenses.
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.