LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
A life annuity with a '10-year guarantee period' means:
- AThe client can cancel within the first 10 years and recover the unpaid balance of the premium
- Payments continue for life, and if death occurs within 10 years the beneficiary receives the balance
- CThe rate of return is guaranteed for 10 years, after which the insurer may reset the payment
- DPayments stop after 10 years, so the client must plan for income from another source once the period has ended
Correct answer: B) Payments continue for life, and if death occurs within 10 years the beneficiary receives the balance
Guarantee periods protect against early death. Longer guarantees reduce the income slightly.
Why the other options are wrong
- AAnnuities in payment are not cancellable.
- CThe guarantee is about payments at death, not the rate.
- DLife payments continue past 10 years.
Exam tip
Guarantee period = minimum payments to beneficiary if death occurs early.
Common mistake
Thinking the guarantee period limits how long the annuity pays.
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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