LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
A segregated fund compared with a GIC offers:
- AThe same guarantee, since both protect principal and the segregated fund adds growth on top
- BGuaranteed interest at a rate set for the term, plus the potential for a market bonus at maturity if the fund has done well
- CCDIC coverage on the guaranteed amount, in the same way as a deposit at a bank
- Market growth potential with a deposit guarantee only at maturity or death, and no guaranteed interest
Correct answer: D) Market growth potential with a deposit guarantee only at maturity or death, and no guaranteed interest
The comparison clarifies what a seg fund guarantee is and is not: it protects capital at defined points, not returns.
Why the other options are wrong
- AGICs guarantee principal and interest at all times.
- BThere is no interest guarantee in a segregated fund.
- CSegregated funds are protected by Assuris, not CDIC.
Exam tip
Seg fund vs GIC: growth potential and estate features vs guaranteed interest.
Common mistake
Equating a 100/100 guarantee with a GIC.
What this tests
CISRO competency component 2.2 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
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