LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
For a 68-year-old with no pension and modest savings who needs certainty for essential expenses, the recommendation should consider:
- AAll equities, since a 68-year-old may live thirty years and only equities can sustain income that long
- BNo annuity of any kind, since irrevocability is unsuitable for a client with modest savings
- Annuitizing enough to cover essentials with CPP and OAS, keeping the rest flexible
- DA 20-year DSC segregated fund, since the long schedule keeps the client from spending the capital
Correct answer: C) Annuitizing enough to cover essentials with CPP and OAS, keeping the rest flexible
Partial annuitization builds the income floor without sacrificing all flexibility.
Why the other options are wrong
- AAn all-equity portfolio exposes essentials to market risk.
- BThe certainty need calls for a guaranteed source.
- DDSC and long lock-ins conflict with liquidity.
Exam tip
Partial annuitization for essentials; flexibility for the rest.
Common mistake
Annuitizing all savings and leaving no emergency reserve.
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.