LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A recommendation to a client with a defined benefit pension covering all essential expenses would typically:
- Allow a higher-risk allocation for personal savings, with seg fund features chosen for estate goals
- BAdd a GMWB contract, since a second guaranteed income stream protects the client if the pension plan should ever fail
- CAnnuitize personal savings as well, since certainty of income is what a pensioner values most
- DHold everything in cash and GICs, since a pensioner has no need to take any investment risk
Correct answer: A) Allow a higher-risk allocation for personal savings, with seg fund features chosen for estate goals
Existing guaranteed income changes the role of personal assets. Duplicating guarantees wastes cost.
Why the other options are wrong
- BIncome guarantees are redundant when the floor is covered.
- CThe floor is already covered by the pension.
- DCash under-utilizes the client's capacity for growth.
Exam tip
DB pension covers essentials → personal assets can pursue growth/estate goals.
Common mistake
Adding income guarantees a pensioner does not need.
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.