LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
Between an RRSP and a TFSA for a segregated fund deposit, the recommendation depends mainly on:
- AThe agent's preference, since the two plans hold the same funds and the choice makes little difference to the outcome
- Current versus future tax rate, need for flexibility, effect on income-tested benefits, and room
- CNothing in particular, since both plans shelter growth from tax and the client can move money between them freely
- DThe fund's name and mandate, since some funds are eligible only for RRSPs and others only for TFSAs
Correct answer: B) Current versus future tax rate, need for flexibility, effect on income-tested benefits, and room
Plan choice is a tax and flexibility decision. Both can hold segregated funds.
Why the other options are wrong
- AThe client's tax picture governs the choice.
- CIt materially affects after-tax outcomes and benefits.
- DThe fund can go in either plan.
Exam tip
RRSP vs TFSA: compare tax rates now and later, flexibility, benefits impact.
Common mistake
Recommending RRSP for a low-income client who will receive GIS.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.