LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
An 'impaired' or 'enhanced' annuity:
- AIs priced for healthy annuitants, who receive a higher income because they will pay less in tax over a longer retirement
- Pays a higher income to an annuitant whose medical condition shortens life expectancy, with evidence
- CPays less to annuitants in poor health, since the insurer expects to bear extra claims costs
- DDoes not exist in Canada, since annuity rates are set by age and sex alone
Correct answer: B) Pays a higher income to an annuitant whose medical condition shortens life expectancy, with evidence
Impaired annuities make annuitization viable for clients in poor health. Availability varies by insurer.
Why the other options are wrong
- AHealthy annuitants get standard rates.
- CThe impaired annuitant receives more, not less.
- DThey are offered by some insurers.
Exam tip
Poor health → ask about impaired annuity rates.
Common mistake
Failing to shop for impaired rates for a client with serious illness.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.