LLQP Segregated Funds & Annuities · Component 3.2 · 25% of the exam
A client telephones to increase the amount of her pre-authorized monthly contribution. The agent should explain that:
- Athe existing plan must be cancelled and a new contract issued before any change is possible
- Bpre-authorized amounts may be changed only once in each calendar year under the contract
- a new authorization is generally needed, because the client is changing the amount withdrawn
- Dthe increase takes effect at once, since the original authorization covers any later amount
Correct answer: C) a new authorization is generally needed, because the client is changing the amount withdrawn
A pre-authorized arrangement permits withdrawals of a stated amount on a stated schedule. Changing the amount requires fresh written authorization from the account holder, though the contract itself continues unchanged.
Why the other options are wrong
- AThe contract continues; only the contribution instruction needs updating.
- BNo such annual restriction applies to changing a contribution amount.
- DThe original authorization covers the amount the client actually agreed to.
Exam tip
Any change to a pre-authorized amount needs a fresh signed authorization.
Common mistake
Adjusting a scheduled withdrawal on a verbal instruction alone.
What this tests
CISRO competency component 3.2 — 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
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