LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
A 'joint-and-survivor annuity with reducing survivor benefit' pays:
- ANothing to the survivor after the first death, since the reduction takes the survivor's share to zero
- BThe same amount for as long as either annuitant lives, since the reduction applies only to the tax withheld from the payments
- CDouble to the survivor, since the survivor takes over both annuitants' shares of the payment
- A higher initial amount while both live, reducing after the first death, with higher starting income
Correct answer: D) A higher initial amount while both live, reducing after the first death, with higher starting income
Survivor percentage is a design lever trading initial income against survivor protection.
Why the other options are wrong
- AThe survivor receives the reduced amount, not nothing.
- BThe payment reduces at the first death.
- CThe payment reduces; it does not double.
Exam tip
Lower survivor percentage → higher starting income.
Common mistake
Choosing 60% survivor without confirming the survivor can live on it.
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.