LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
A segregated fund contract has an older annuitant and names the contract holder's spouse as successor annuitant. The death benefit guarantee will be triggered:
- Aonly when both the contract holder and the annuitant have died in the same calendar year
- Bwhen the contract holder dies, regardless of whether the annuitant is still alive at that time
- Con the death of the named beneficiary, since the proceeds are payable to that person
- on the death of the annuitant on whose life the contract's death benefit is measured
Correct answer: D) on the death of the annuitant on whose life the contract's death benefit is measured
The death benefit guarantee is measured on the life of the annuitant named in the contract. Choosing a younger annuitant, where the contract permits it, can extend the period over which the guarantee and resets remain available.
Why the other options are wrong
- AThe guarantee is triggered on the annuitant's death, not by a combination of deaths.
- BThe holder's death matters for ownership and tax, but the guarantee follows the annuitant.
- CA beneficiary receives the proceeds and does not trigger the death benefit.
Exam tip
The annuitant's life measures the death benefit; the holder owns and controls the contract.
Common mistake
Assuming the contract holder and annuitant are always the same person.
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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