LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
A 'deferred life annuity' purchased with pension or RRSP funds:
- APays income immediately on purchase, with the deferral applying only to the tax on the payments until the annuitant turns 65
- BIs a TFSA product, since the deferral of income keeps the funds outside the client's taxable income
- Starts lifetime payments at a chosen future age, locking in terms now; funds stay registered until then
- DHas no death benefit options, since the deferral period means nothing is payable before payments start
Correct answer: C) Starts lifetime payments at a chosen future age, locking in terms now; funds stay registered until then
Deferred life annuities suit clients who want to secure future income; advanced life deferred annuities (ALDAs) allow deferral to a later age within limits.
Why the other options are wrong
- APayments are deferred to the chosen age.
- BA deferred life annuity is a registered annuity contract, not a TFSA.
- DGuarantee periods and death benefits can be added.
Exam tip
Deferred life annuity: lock terms now, income later; ALDA allows later start within limits.
Common mistake
Confusing a deferred annuity's accumulation with a deferred life annuity's future income start.
What this tests
CISRO competency component 2.3 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.