LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client wants guaranteed lifetime income but fears the insurer's failure. The need response includes:
- Explaining Assuris protection, spreading large amounts across insurers, and choosing strong companies
- BBuying from one insurer only, since a single large contract earns the best rate
- CSetting the concern aside, since Canadian life insurers are closely regulated and have never been allowed to fail
- DAvoiding annuities entirely, since the risk cannot be managed in any other way
Correct answer: A) Explaining Assuris protection, spreading large amounts across insurers, and choosing strong companies
Counterparty risk is legitimate. Assuris and diversification address it.
Why the other options are wrong
- BConcentration increases the risk.
- CThe concern is valid; insurers have failed.
- DThe need for lifetime income remains.
Exam tip
Insurer risk: Assuris coverage, diversify large annuity purchases.
Common mistake
Placing a very large annuity with one insurer without discussing Assuris limits.
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.