LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
For a client whose main objective is income today from non-registered savings with tax efficiency, a recommendation could compare:
- AOnly equity funds, since dividends and capital gains are the only tax-efficient sources of income available
- BOnly GICs, since guaranteed interest is the most reliable source of income for a client who needs it now
- A prescribed annuity, a systematic withdrawal plan, dividend funds and a GMWB, matched to her priorities
- DOnly an RRSP, since sheltering the savings from tax is the most efficient way to fund income today
Correct answer: C) A prescribed annuity, a systematic withdrawal plan, dividend funds and a GMWB, matched to her priorities
Several income structures have different tax profiles. Comparing them is the recommendation's substance.
Why the other options are wrong
- AEquities alone lack income certainty.
- BGIC interest is fully taxable.
- DRRSP contributions do not produce income now.
Exam tip
Non-registered income: prescribed annuity, SWP, dividend funds, GMWB.
Common mistake
Ignoring the return-of-capital tax advantage of SWPs and prescribed annuities.
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.