LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A recommendation for a client with a moderate profile and 10-year horizon might use resets by:
- AResetting after a market fall, since that is when the guarantee is most needed and resets are cheapest
- BNever resetting, since every reset extends the maturity date beyond the point at which she needs the money
- Automatic death guarantee resets, with maturity resets only while the extended maturity fits her horizon
- DResetting monthly regardless of the market, since more resets always mean a higher guaranteed amount at maturity
Correct answer: C) Automatic death guarantee resets, with maturity resets only while the extended maturity fits her horizon
Different reset features have different consequences. Recommending their use requires understanding the contract.
Why the other options are wrong
- AResets lock in value; after a fall there is nothing to lock.
- BResets add value when timed well.
- DReset limits and maturity extension apply.
Exam tip
Death resets: usually no maturity extension. Maturity resets: extend the term.
Common mistake
Confusing death guarantee resets with maturity guarantee resets.
What this tests
CISRO competency component 3.1 — 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
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