LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
An immediate annuity:
- AAccumulates value for a term before any payments begin, then converts to income
- Begins income within one payment period after purchase, for a client who needs income now
- CStarts payments several years later, at a date chosen by the client when the contract is bought
- DHas a cash value that the client can withdraw at any time during the payment period
Correct answer: B) Begins income within one payment period after purchase, for a client who needs income now
Immediate annuities are the retirement-income form. Deferred annuities accumulate first.
Why the other options are wrong
- AImmediate annuities pay; they do not accumulate.
- CThat describes a deferred annuity.
- DImmediate annuities generally have no cash value.
Exam tip
Immediate = income starts right away; deferred = accumulate then pay.
Common mistake
Assuming an immediate annuity can be surrendered for cash.
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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