LLQP Segregated Funds & Annuities · Component 4.1 · 10% of the exam
A client wants to cancel a segregated fund contract shortly after purchase, outside the rescission period. The agent should explain:
- ACancellation is impossible after the rescission period, since the contract is then binding on both parties until the maturity date
- Surrender is at market value less charges, with tax and forfeited guarantees, so a lesser change should be explored
- CThe guarantee applies on surrender, so the client receives at least the deposited amount back
- DFull deposits are refunded on request during the first year, less an administrative fee
Correct answer: B) Surrender is at market value less charges, with tax and forfeited guarantees, so a lesser change should be explored
Termination service means presenting the consequences and alternatives before processing.
Why the other options are wrong
- ASurrender is permitted at any time.
- CGuarantees apply only at maturity or death.
- DMarket value applies after the rescission period.
Exam tip
Early surrender: market value, charges, tax, lost guarantee; consider alternatives.
Common mistake
Processing a surrender without exploring the client's real concern.
What this tests
CISRO competency component 4.1 — Provide customer service during the validity period of the coverage — which is weighted at 10% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 4
- A client's daughter was born last month and the client wants her added to the segregated fund designation. The agent should:
- A client wants to withdraw part of his segregated fund before maturity. The agent should explain:
- A client's segregated fund contract is approaching its maturity date. The insurer will:
- A client asks to add her adult son as a joint owner of her non-registered segregated fund contract. The agent should explain that:
- A client wants to replace the beneficiary on a contract where the current designation was made irrevocable. The agent must explain that:
- A client who has lost her job asks to pause her pre-authorized monthly contributions for six months. The agent should:
Practice the whole Segregated Funds & Annuities module
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