LLQP Segregated Funds & Annuities · Component 2.1 · 30% of the exam
A segregated fund is legally:
- An insurance contract whose value is tied to a separately held pool of assets, with guarantees
- BA pension plan registered under provincial pension legislation and administered by the insurer
- CA mutual fund trust that has been wrapped in an insurance policy for marketing purposes
- DA bank deposit invested in securities, protected by deposit insurance up to the limit
Correct answer: A) An insurance contract whose value is tied to a separately held pool of assets, with guarantees
The 'segregated' assets are kept apart from the insurer's general account. The contract holder owns a contract, not the assets directly. This structure produces the guarantees, beneficiary and creditor features.
Why the other options are wrong
- BA segregated fund is an individual insurance contract, not a pension plan.
- CMutual funds are securities; segregated funds are insurance contracts.
- DIt is not a deposit and has no CDIC coverage.
Exam tip
Seg fund = insurance contract with assets segregated from the insurer's general account.
Common mistake
Describing a segregated fund as 'a mutual fund with a guarantee'.
What this tests
CISRO competency component 2.1 — 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.