LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
A life annuity pays:
- AFor ten years only, after which the client must buy a new annuity at whatever rates are available at that time
- BA lump sum at death equal to the premium less the payments already received
- CUntil the capital and credited interest are exhausted, at which point payments stop
- Income for the annuitant's lifetime, pooling longevity risk so payments exceed a term-certain annuity
Correct answer: D) Income for the annuitant's lifetime, pooling longevity risk so payments exceed a term-certain annuity
Mortality credits (from annuitants who die early) fund higher lifetime payments. This is the unique benefit of life annuities.
Why the other options are wrong
- ALife annuities pay for life.
- BWithout a guarantee period, nothing is paid at death.
- CPayments do not stop when the capital is used up.
Exam tip
Life annuity: lifetime income, mortality credits, longevity insurance.
Common mistake
Telling a client payments stop when their capital is used up.
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
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