LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
A segregated fund contract's guarantees may be reduced or unavailable if:
- AThe fund invests only in Canadian securities, since guarantees are reserved for global mandates
- The annuitant is above the insurer's maximum age, or deposits are made after a stated age
- CThe annuitant is a woman, since longer life expectancy makes the death guarantee more costly
- DThe annuitant is under 40, since young holders are expected to switch funds too often
Correct answer: B) The annuitant is above the insurer's maximum age, or deposits are made after a stated age
Age limits manage the insurer's death guarantee risk. Late-age deposits often receive reduced death guarantees (for example, 75%).
Why the other options are wrong
- AFund domicile is irrelevant to guarantees.
- CThe annuitant's sex does not affect guarantee availability.
- DYoung annuitants receive full guarantees.
Exam tip
Check age limits on guarantees and late deposits.
Common mistake
Promising a 100% death guarantee on a deposit made at 85.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.