LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A Life Income Fund (LIF) differs from a RRIF in that a LIF:
- AHas no minimum withdrawal, since pension law is designed to preserve the funds for as long as possible
- BIs tax-free, since the pension contributions that funded it were already taxed
- Has both a minimum and a maximum annual withdrawal because of its pension origin
- DAccepts contributions from earned income, whereas a RRIF accepts transfers only
Correct answer: C) Has both a minimum and a maximum annual withdrawal because of its pension origin
The maximum protects the pension purpose. Some jurisdictions require or permit conversion to an annuity at a certain age or allow partial unlocking at LIF creation.
Why the other options are wrong
- ALIFs have minimums like RRIFs.
- BWithdrawals are taxable.
- DLIFs receive transfers only, like RRIFs.
Exam tip
LIF = RRIF with a maximum.
Common mistake
Planning LIF withdrawals above the jurisdictional maximum.
What this tests
CISRO competency component 1.2 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
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