LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A recommendation to a client in poor health who wants lifetime income should consider:
- An impaired annuity, a life annuity with a long guarantee or cash refund, or a GMWB or RRIF that preserves capital
- BA straight life annuity at standard rates, since the client needs income and the standard rate is the simplest
- CA 30-year term-certain annuity, since it guarantees the estate will receive whatever the client does not
- DNo annuity of any kind, since a client in poor health should not give up capital to an insurer
Correct answer: A) An impaired annuity, a life annuity with a long guarantee or cash refund, or a GMWB or RRIF that preserves capital
Health changes annuity economics. Options either raise income (impaired) or protect capital (guarantees, RRIF).
Why the other options are wrong
- BStandard rates undervalue a shortened life.
- CA 30-year term may outlast the client, with no longevity need.
- DSeveral structures serve a client in poor health who wants lifetime income.
Exam tip
Poor health: impaired annuity or capital-protecting structures.
Common mistake
Selling a standard straight life annuity to a client with serious illness.
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.