LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A recommendation should address the risk of insurer insolvency by:
- Explaining Assuris coverage and limits, choosing strong insurers, and diversifying very large amounts
- BAssuring the client that there is no risk, since Canadian life insurers are regulated too closely to fail
- CRecommending a single insurer for everything, since one large relationship earns the best terms
- DLeaving it out of the discussion, since the risk is too remote to be worth the client's concern
Correct answer: A) Explaining Assuris coverage and limits, choosing strong insurers, and diversifying very large amounts
Counterparty risk exists for guarantees and annuities; Assuris and diversification address it.
Why the other options are wrong
- BPromising no insolvency risk overstates the protection available.
- CConcentration increases exposure.
- DIt is a real, if small, risk that must be disclosed.
Exam tip
Assuris limits; diversify large guaranteed amounts.
Common mistake
Never mentioning Assuris to a client relying on guarantees.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.