LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
A term-certain annuity:
- AIs a life insurance policy that pays a set number of instalments to the beneficiary at death
- BPays for life, but at a lower rate than a life annuity because the term is fixed in advance
- CHas no beneficiary, since payments simply end when the annuitant dies during the term
- Pays for a fixed number of years regardless of survival, with the balance to the beneficiary
Correct answer: D) Pays for a fixed number of years regardless of survival, with the balance to the beneficiary
Term-certain annuities suit bridging needs (for example, income until a pension starts). RRSP funds can buy a term-certain annuity to age 90.
Why the other options are wrong
- AIt is an annuity contract, not a life insurance policy.
- BIt ends at the end of its term, not at death.
- CThe balance passes to a beneficiary.
Exam tip
Term-certain: fixed period, beneficiary gets the balance, no longevity protection.
Common mistake
Using a term-certain annuity to cover lifetime essential expenses.
What this tests
CISRO competency component 2.3 — 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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