LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A recommendation should describe segregated fund 'guarantee limits' honestly, including that:
- AThere are no limits, since the insurer's guarantee is an unconditional promise backed by its full capital and reserves
- BGuarantees cover the fees paid, so the client can never end up with less than the amount deposited net of costs
- CGuarantees apply daily, so the client can withdraw the guaranteed amount at any time during the term
- Guarantees apply only at maturity or death, reduce with withdrawals, may be capped by age, and depend on solvency
Correct answer: D) Guarantees apply only at maturity or death, reduce with withdrawals, may be capped by age, and depend on solvency
Complete disclosure of limits prevents disappointment and complaints.
Why the other options are wrong
- AGuarantee limits are numerous and must be disclosed.
- BFees are not refunded.
- CGuarantees apply only at maturity or death.
Exam tip
State the limits: timing, withdrawals, age, solvency, fees.
Common mistake
Presenting the guarantee without its limits.
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.