LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client's need to fund long-term care costs late in life relates to the investment plan because:
- AGovernment pays all care costs, so the investment plan need not reserve anything for them at any stage
- BIt does not relate, since care costs arise after the investment plan has done its work
- CAnnuities cover care, since the guaranteed income can be redirected to a facility
- Care costs are large and uncertain, so the plan may reserve capital or use LTC insurance
Correct answer: D) Care costs are large and uncertain, so the plan may reserve capital or use LTC insurance
Care costs are a late-retirement risk that competes with legacy goals. Planning must reserve for them.
Why the other options are wrong
- AGovernment coverage is partial.
- BCare costs are a major late-life expense the plan must anticipate.
- CAnnuity income may be insufficient and ends at death.
Exam tip
Reserve for late-life care; consider LTC insurance.
Common mistake
Planning as if expenses fall steadily through retirement.
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
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