LLQP Segregated Funds & Annuities · Component 2.4 · 30% of the exam
A 'group annuity' in the retirement context is:
- AA group RRSP that the employer has arranged to convert automatically to income when each member retires
- BA capital accumulation plan in which members choose annuity-like investment options
- A contract under which an insurer takes on a sponsor's pension obligations to a group of retirees
- DA deferred profit sharing plan that pays out as periodic income rather than a lump sum
Correct answer: C) A contract under which an insurer takes on a sponsor's pension obligations to a group of retirees
Group annuities de-risk DB plans. For members, the pension continues from the insurer.
Why the other options are wrong
- AA group annuity is an insurer's pension obligation, not a group RRSP.
- BA group annuity pays pensions; it is not a member-directed plan.
- DA group annuity is not a deferred profit sharing plan.
Exam tip
Group annuity = insurer pays the pensions; sponsor de-risked.
Common mistake
Confusing a group annuity with a group RRSP.
What this tests
CISRO competency component 2.4 — 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.