LLQP Segregated Funds & Annuities · Component 4.2 · 10% of the exam
An annuitant with a 15-year guarantee period dies in year six. The beneficiary:
- AReceives nothing, since a life annuity ends at the annuitant's death whenever it occurs
- BReceives the original premium in full, since the guarantee period exists to return the client's capital
- Receives the remaining guaranteed payments, continued or commuted per the contract, on a claim with proof of death
- DReceives lifetime payments in the annuitant's place, since the guarantee transfers the annuity to the beneficiary for the rest of their life
Correct answer: C) Receives the remaining guaranteed payments, continued or commuted per the contract, on a claim with proof of death
Guarantee period balances are the annuity's death benefit. Registered annuity balances paid to non-spouses are taxable to the deceased or beneficiary per rules.
Why the other options are wrong
- AThe guarantee balance is paid to the beneficiary.
- BIt is not a refund of premium unless it is a refund annuity.
- DOnly the guaranteed balance is paid, not lifetime payments.
Exam tip
Annuity death in guarantee period: remaining payments or commuted value.
Common mistake
Assuming the beneficiary receives lifetime payments.
What this tests
CISRO competency component 4.2 — Provide customer service during the validity period of the coverage — which is weighted at 10% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 4
- A client's daughter was born last month and the client wants her added to the segregated fund designation. The agent should:
- A client wants to withdraw part of his segregated fund before maturity. The agent should explain:
- A client's segregated fund contract is approaching its maturity date. The insurer will:
- A client asks to add her adult son as a joint owner of her non-registered segregated fund contract. The agent should explain that:
- A client wants to replace the beneficiary on a contract where the current designation was made irrevocable. The agent must explain that:
- A client who has lost her job asks to pause her pre-authorized monthly contributions for six months. The agent should:
Practice the whole Segregated Funds & Annuities module
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