LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client who owns a business with creditor exposure has a need for:
- AGICs, since deposits held at a bank are beyond the reach of business creditors
- BMore business debt, since a leveraged company is a less attractive target for creditors
- Segregated funds or annuities with an appropriate beneficiary designation, within the limits of protection
- DMutual funds held in a corporate account, which creditors cannot attach
Correct answer: C) Segregated funds or annuities with an appropriate beneficiary designation, within the limits of protection
Creditor protection is a legitimate need for business owners and professionals. Insurance contracts offer it where the designation qualifies and the deposit was not made to defeat creditors.
Why the other options are wrong
- AGICs offer no creditor protection and can be seized like any deposit.
- BDebt increases exposure rather than reducing it.
- DMutual funds have no creditor protection.
Exam tip
Creditor exposure → seg funds/annuities with family-class or irrevocable beneficiary.
Common mistake
Promising protection for deposits made after a claim arises.
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
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