LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A healthy client with several relatives who lived past ninety-five is choosing a retirement income structure. This history strengthens the case for:
- Aholding everything in cash so the capital remains intact for as long as she lives
- a life annuity or another guaranteed lifetime income, because outliving savings is the real risk
- Ca term-certain annuity ending at eighty-five, which gives the largest possible payment now
- Ddrawing down savings on a plan that assumes she dies at average life expectancy
Correct answer: B) a life annuity or another guaranteed lifetime income, because outliving savings is the real risk
Family longevity and good health raise the chance of a very long retirement. A lifetime income shifts that risk to the insurer, which is exactly what a client likely to live well beyond average needs.
Why the other options are wrong
- ACash preserves the amount but not its purchasing power over decades.
- CAn income that stops at eighty-five is dangerous for someone likely to live longer.
- DPlanning to the average leaves roughly half of such clients short of money.
Exam tip
Longevity in the family shifts the answer toward guaranteed lifetime income.
Common mistake
Planning a drawdown to average life expectancy for a client likely to exceed it.
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.