LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client's recommendation includes an annuity purchased with locked-in funds. The design must comply with:
- AThe insurer's marketing guidelines, since the insurer designs the annuity forms that are available for locked-in funds
- BNothing beyond suitability, since the money is the client's once it has been transferred out of the pension plan
- The pension jurisdiction's rules on joint-and-survivor form, term-certain and start age, plus suitability
- DOnly the Income Tax Act rules on registered annuities, since pension law ceases to apply after the transfer
Correct answer: C) The pension jurisdiction's rules on joint-and-survivor form, term-certain and start age, plus suitability
Locked-in money carries pension legislation into the annuity. Non-compliant designs cannot be issued.
Why the other options are wrong
- ALegislation, not the insurer's marketing, governs locked-in annuity design.
- BPension jurisdiction rules apply to annuities bought with locked-in funds.
- DPension law also applies, alongside the Income Tax Act.
Exam tip
Locked-in annuity: pension rules on form, survivor, timing.
Common mistake
Designing a locked-in annuity like a non-registered one.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.