LLQP Segregated Funds & Annuities · Component 2.1 · 30% of the exam
A 'guaranteed interest' option within a segregated fund contract or an insurer's accumulation annuity:
- AHas no fixed term, so the rate floats with the insurer's general account yield from month to month
- Pays a fixed rate for a term, like a GIC, while keeping beneficiary and creditor features
- CIs a money market fund whose unit value fluctuates with short-term interest rates
- DIs an equity fund whose return is guaranteed by the insurer at the end of each year
Correct answer: B) Pays a fixed rate for a term, like a GIC, while keeping beneficiary and creditor features
Insurers offer GIC-like options (often called GIAs) inside contracts, protected by Assuris rather than CDIC.
Why the other options are wrong
- AGuaranteed interest options have set terms, like GICs.
- CMoney market funds fluctuate; guaranteed interest options are fixed.
- DA guaranteed interest option pays a fixed rate; it is not an equity fund.
Exam tip
GIA = insurer's GIC-equivalent with insurance features; Assuris-protected.
Common mistake
Telling a client a GIA is CDIC-insured.
What this tests
CISRO competency component 2.1 — 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
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