LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client tells the agent he expects to leave Canada permanently within two years. Before recommending a segregated fund the agent should:
- Arecommend the largest possible deposit now to use the contribution room before departure
- Bpromise that the contract will continue on exactly the same terms once he has emigrated
- raise the tax and plan consequences of ceasing residence and suggest professional tax advice
- Dignore the plan, since residence has no effect on any Canadian investment contract
Correct answer: C) raise the tax and plan consequences of ceasing residence and suggest professional tax advice
Ceasing residence affects registered plans, withholding on withdrawals and the treatment of accrued gains. The agent should flag these issues, note the client's stated timeline in the file and recommend that a tax professional be consulted.
Why the other options are wrong
- AMaximizing a deposit before departure could create a costly problem rather than a benefit.
- BAn agent cannot promise how a contract will be treated after a change of residence.
- DResidence affects contribution eligibility, withholding and the taxation of gains.
Exam tip
Any stated plan to leave Canada must trigger a tax referral before the deposit.
Common mistake
Recommending a registered deposit without checking the client's residence plans.
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.