LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A retiree needs monthly income but wants to keep control of capital and leave a residual to heirs. The need points toward:
- ACashing out the portfolio and holding the proceeds in a savings account for monthly draws
- A RRIF or systematic withdrawal plan from segregated funds, possibly with a guaranteed minimum withdrawal
- CA straight life annuity, since it produces the highest guaranteed monthly income
- DA term deposit laddered to mature each month, providing income with no market risk
Correct answer: B) A RRIF or systematic withdrawal plan from segregated funds, possibly with a guaranteed minimum withdrawal
Income with control and estate value favours withdrawal-based approaches over annuitization. The trade-off is longevity risk.
Why the other options are wrong
- ACashing out creates tax and loses growth.
- CA straight life annuity gives up capital and estate value.
- DA term deposit provides limited income and no growth.
Exam tip
Income + control + estate → RRIF/SWP, perhaps with GMWB.
Common mistake
Recommending full annuitization to a client with bequest goals.
What this tests
CISRO competency component 1.3 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.