LLQP Segregated Funds & Annuities · Component 3.2 · 25% of the exam
A pre-authorized contribution (PAC) set-up requires:
- A signed PAD authorization with banking details, amount, frequency and allocation, continuing until changed
- BAnnual renewal of the authorization, since a pre-authorized debit expires automatically after twelve months
- CA credit check on the client, since the insurer is extending credit until each monthly contribution clears
- DNothing in writing, since the bank confirms the arrangement directly with the insurer once the first debit has cleared
Correct answer: A) A signed PAD authorization with banking details, amount, frequency and allocation, continuing until changed
PACs are simple but must be documented, and registered room must be monitored to avoid over-contribution.
Why the other options are wrong
- BA PAC continues until changed or cancelled.
- CNo credit check is required for a pre-authorized contribution.
- DWritten authorization is required.
Exam tip
PAC: PAD authorization, allocation, room monitoring.
Common mistake
Setting a PAC that over-contributes to a TFSA.
What this tests
CISRO competency component 3.2 — 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.