LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
A summary of when a segregated fund is the better choice over a comparable mutual fund is when the client:
- AWants the lowest cost, since the insurer's scale makes segregated funds cheaper than the equivalent mutual funds
- BHas no estate goals, since the beneficiary designation is then a feature without a cost
- CNeeds the money next year, since the guarantee protects the withdrawal from a market decline
- Values a floor at maturity or death, probate bypass, creditor protection or staying invested, and accepts the fee
Correct answer: D) Values a floor at maturity or death, probate bypass, creditor protection or staying invested, and accepts the fee
This is the suitability synthesis: features versus cost. It aligns the recommendation with articulated needs.
Why the other options are wrong
- ALowest cost favours mutual or index funds.
- BEstate goals are a primary driver toward segregated funds.
- CShort horizons do not benefit from guarantees.
Exam tip
Seg fund when: floor, probate bypass, creditor protection, behavioural comfort.
Common mistake
Recommending seg funds without identifying which feature the client needs.
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.