LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client's need to protect a spouse from financial mismanagement after the client's death can be addressed by:
- ANothing, since an adult spouse is entitled to manage inherited money however they choose
- BNaming the children as beneficiaries, so they can look after the surviving parent
- CLeaving everything as a lump sum, so the spouse has maximum flexibility to invest or spend as they see fit
- Annuity settlement options, a joint-and-survivor annuity, or a trust that pays income
Correct answer: D) Annuity settlement options, a joint-and-survivor annuity, or a trust that pays income
Settlement options on insurance and annuity products convert lump sums into income streams — a protective tool.
Why the other options are wrong
- AIncome-paying structures exist precisely to protect a vulnerable survivor.
- BBypassing the spouse does not protect them.
- CA lump sum may be mismanaged.
Exam tip
Vulnerable survivor → income structures (annuity settlement, joint annuity, trust).
Common mistake
Ignoring settlement options as an estate tool.
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.