LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- AGuarantees at maturity and death, since exchange-traded funds are backed by the exchange's clearing house and its members
- BCreditor protection, since securities held in a brokerage account are exempt from seizure in most provinces
- Lower cost and intraday trading, but no guarantees, no designation outside registered plans, and no creditor protection
- DBeneficiary designation outside registered plans, so the units pass to heirs without probate
Correct answer: C) Lower cost and intraday trading, but no guarantees, no designation outside registered plans, and no creditor protection
ETFs are the low-cost alternative; seg funds compete on insurance features, not cost.
Why the other options are wrong
- AETFs have no guarantees.
- BETFs have no creditor protection.
- DNon-registered ETFs pass through the estate.
Exam tip
ETF: cheap, no insurance features. Seg fund: features at a cost.
Common mistake
Claiming seg funds are cheaper than ETFs.
What this tests
CISRO competency component 2.2 — 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:
- A segregated fund's 'automatic death benefit reset' feature:
- An 'excess withdrawal' under a GMWB contract:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.