LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
'Annuity laddering' means:
- ABuying only term-certain annuities of different lengths, so that each one matures in a different year
- BCancelling and repurchasing annuities as rates rise, so the client always holds the best available rate
- Purchasing annuities in stages over several years to diversify rate risk and keep capital flexible
- DBuying one annuity at age 60 with all of the capital, so the client has the longest possible payment period
Correct answer: C) Purchasing annuities in stages over several years to diversify rate risk and keep capital flexible
Laddering addresses rate timing and preserves flexibility — a standard recommendation technique.
Why the other options are wrong
- ALaddering applies to life annuities, not only term-certain ones.
- BAnnuities in payment cannot be cancelled.
- DA single purchase is the opposite of laddering.
Exam tip
Ladder annuity purchases to spread rate risk and capture age-based increases.
Common mistake
Annuitizing all at once at a rate trough.
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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