LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A recommendation to reset the guarantee should consider:
- Whether locking in the higher value is worth extending maturity, the need date, and the reset rules
- BOnly the current market level, since a reset is always worthwhile when the fund is above its previous high
- CThe agent's commission on the reset, since a reset is a transaction on which the agent is compensated
- DNothing in particular, since resets are automatic and the client has no decision to make about them
Correct answer: A) Whether locking in the higher value is worth extending maturity, the need date, and the reset rules
Resets are valuable but extend the term. A client two years from needing the money may not want a reset that pushes maturity out ten years.
Why the other options are wrong
- BThe maturity extension matters as much as the market level.
- CThe agent's commission has no bearing on whether a reset suits the client.
- DThe trade-off matters and the client decides.
Exam tip
Reset: higher guarantee vs later maturity; check the need date.
Common mistake
Resetting near the need date.
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.