LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client will retire with government benefits and modest savings and may qualify for an income-tested supplement. The agent should consider that:
- Aall savings are ignored when the supplement is calculated, so the structure does not matter
- Bthe supplement is paid only to clients who hold no registered savings of any kind at all
- registered withdrawals count as income and could reduce the supplement she receives
- Dan annuity purchase permanently disqualifies a client from every federal income programme
Correct answer: C) registered withdrawals count as income and could reduce the supplement she receives
Withdrawals from registered plans and annuity income count toward the income test, so each dollar drawn can reduce the supplement. A tax-free account may serve such a client better, and the effect should be flagged for professional advice.
Why the other options are wrong
- AThe supplement is tested on income, and registered withdrawals form part of it.
- BHolding registered savings does not disqualify anyone from the supplement.
- DAnnuity income is counted like other income; it does not disqualify the client outright.
Exam tip
Low income plus a tested supplement equals check the effect of registered withdrawals.
Common mistake
Recommending registered savings to a client whose benefits are reduced by the withdrawals.
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.