LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
A segregated fund's 'settlement option' at the annuitant's death can allow:
- The death benefit to be paid as an annuity or in instalments rather than a lump sum
- BOnly a lump sum, since the contract terminates on the annuitant's death and cannot continue
- CNothing beyond the standard lump sum, since settlement options exist only on life insurance
- DPayment to the insurer, which holds the proceeds in its general account until the estate is settled
Correct answer: A) The death benefit to be paid as an annuity or in instalments rather than a lump sum
Settlement options are an estate planning tool available on insurance contracts, including seg funds, at the owner's election.
Why the other options are wrong
- BInstalment options exist.
- CSettlement options do exist on segregated fund contracts.
- DThe insurer pays out; it does not retain the proceeds.
Exam tip
Settlement options: death benefit as income to a vulnerable beneficiary.
Common mistake
Forgetting settlement options for young or spendthrift beneficiaries.
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.