LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
A segregated fund's 'automatic death benefit reset' feature:
- AApplies only at the maturity date, when the insurer compares the death guarantee with the market value
- BLowers the death benefit guarantee to the market value when the fund has fallen, to keep fees down
- CExtends the maturity date each time it operates, in the same way as a discretionary maturity reset exercised by the client
- Periodically raises the death guarantee to market value if higher, usually to a stated age, without extending maturity
Correct answer: D) Periodically raises the death guarantee to market value if higher, usually to a stated age, without extending maturity
Automatic death resets are a valuable feature for estate-focused clients; age caps apply.
Why the other options are wrong
- AAutomatic death resets apply during the contract, not only at maturity.
- BAutomatic resets only ever raise the death benefit guarantee.
- CDeath resets typically do not extend maturity.
Exam tip
Automatic death resets: raise the death guarantee, no maturity extension, age cap.
Common mistake
Confusing death resets with maturity resets.
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:
- An 'excess withdrawal' under a GMWB contract:
Practice the whole Segregated Funds & Annuities module
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