LLQP Segregated Funds & Annuities · Component 4.1 · 10% of the exam
A client wants to withdraw part of his segregated fund before maturity. The agent should explain:
- AThe withdrawal is paid at the guaranteed value, since the guarantee protects every dollar deposited
- The withdrawal is at market value, may incur charges, reduces the guarantees, and is taxable by plan type
- CWithdrawals are prohibited before the maturity date, since the guarantee requires the deposit to stay invested
- DWithdrawals are tax-free in every case, since the contract is an insurance policy rather than an investment and is exempt from allocation
Correct answer: B) The withdrawal is at market value, may incur charges, reduces the guarantees, and is taxable by plan type
Service includes explaining the full effect of a withdrawal so the client can decide. Guarantee reduction is the point clients most often miss.
Why the other options are wrong
- AMarket value applies to interim withdrawals.
- CWithdrawals are permitted before maturity.
- DTax depends on the plan type.
Exam tip
Withdrawal: market value, charges, guarantee reduction, tax.
Common mistake
Processing a withdrawal without explaining the guarantee effect.
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'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:
- A client is considering replacing her existing segregated fund contract with one from another insurer. Before any replacement the agent must:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.