LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
For a client converting an RRSP at 71 who wants flexibility now and lifetime certainty later, a suitable recommendation is:
- ALeaving the RRSP unconverted for a few more years, since conversion is only required when income is needed
- A RRIF in suitable segregated funds now, with partial annuitization later or a GMWB
- CCashing out the RRSP and reinvesting the proceeds in a non-registered contract with a death guarantee
- DA single-life annuity with all of the funds immediately, since it produces the highest guaranteed income
Correct answer: B) A RRIF in suitable segregated funds now, with partial annuitization later or a GMWB
Staged annuitization balances flexibility and longevity protection. Later annuitization yields higher income per dollar.
Why the other options are wrong
- ALeaving the RRSP unconverted is not permitted after 71.
- CCashing out taxes the entire balance in one year.
- DFull immediate annuitization loses all flexibility.
Exam tip
RRIF now, annuitize part later; or GMWB.
Common mistake
Missing the conversion deadline while deliberating.
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.