LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
An 'accumulation annuity' with a guaranteed interest rate compares with a GIC in that it:
- AIs CDIC insured, since it is a deposit-like product with a guaranteed rate
- Offers a guaranteed rate for a term like a GIC, with beneficiary, creditor and Assuris features
- CPays income immediately, since the guaranteed rate is distributed to the client each month
- DHas equity exposure, so the guaranteed rate is a minimum that may be exceeded in good years when the market rises
Correct answer: B) Offers a guaranteed rate for a term like a GIC, with beneficiary, creditor and Assuris features
Accumulation annuities (GIAs) are the insurer's deposit-like product. The features are structural; the yield is comparable.
Why the other options are wrong
- AAccumulation annuities are covered by Assuris, not CDIC.
- CIt accumulates until annuitized or surrendered.
- DIt pays a guaranteed fixed rate with no equity exposure.
Exam tip
Accumulation annuity = GIC-like with insurance features; Assuris.
Common mistake
Describing an accumulation annuity as a guaranteed income stream.
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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