LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
Assessing a client's existing life annuity in payment, the agent should identify:
- AIts management expense ratio, since annuity costs are deducted from each payment
- BNothing, since an annuity in payment cannot be changed and has no bearing on further planning
- CIts current market value, so the client can compare surrender with continuing the payments
- Its guarantee period, survivor provision, indexing and tax treatment
Correct answer: D) Its guarantee period, survivor provision, indexing and tax treatment
An annuity in payment is fixed, but understanding its terms is essential for planning the rest of the client's assets.
Why the other options are wrong
- AAnnuities do not carry MERs.
- BIts terms still matter for planning, especially at death.
- CLife annuities in payment have no market value.
Exam tip
Existing annuity: guarantee period, survivor terms, indexing, tax.
Common mistake
Failing to check whether an annuity has any survivor benefit.
What this tests
CISRO competency component 1.2 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.