LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client wants income from a segregated fund without annuitizing. The recommendation could use:
- AOnly occasional lump-sum withdrawals, since scheduled withdrawals are not permitted under a segregated fund contract
- BA term-certain annuity purchased with the contract value, since that is the only way to draw regular income
- CNo income at all, since a segregated fund is an accumulation product that must be annuitized to pay out
- A systematic withdrawal plan at market value, watching sustainability and guarantee effects, or a GMWB
Correct answer: D) A systematic withdrawal plan at market value, watching sustainability and guarantee effects, or a GMWB
SWPs are flexible income with market and guarantee-erosion risk; GMWBs add certainty. Both are recommendation options.
Why the other options are wrong
- AScheduled withdrawals are available.
- BBuying an annuity is annuitizing, which the client wants to avoid.
- CSystematic withdrawal plans and GMWBs both provide income without annuitizing.
Exam tip
Income without annuitizing: SWP (flexible, risk) or GMWB (guaranteed, fee).
Common mistake
Setting an SWP rate that erodes the guarantee and capital.
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.