LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
A segregated fund's guarantee is backed by:
- ACDIC, which insures the guaranteed amount in the same way as a bank deposit
- The insurer's general funds and capital, with Assuris protection if the insurer becomes insolvent
- CThe federal government, which stands behind every guarantee issued by a federally licensed life insurance company
- DThe fund manager, who must make good any shortfall from its own management fees
Correct answer: B) The insurer's general funds and capital, with Assuris protection if the insurer becomes insolvent
The insurer's promise is the guarantee. Assuris backs the guaranteed amounts at a percentage, not the market value.
Why the other options are wrong
- ACDIC covers bank deposits, not insurance contracts.
- CThere is no government guarantee.
- DManagers do not guarantee the funds they run.
Exam tip
Guarantee = insurer's promise; Assuris backstop within limits.
Common mistake
Implying a federal guarantee.
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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