LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
Guarantee levels are commonly expressed as 75/75, 75/100 or 100/100. The numbers refer to:
- The maturity guarantee and death benefit guarantee percentages respectively
- BThe minimum and maximum ages at which the annuitant may hold the contract with guarantees
- CThe equity and fixed income split of the underlying portfolio, expressed as percentages
- DThe insurance fee and management fee, expressed as basis points of assets each year
Correct answer: A) The maturity guarantee and death benefit guarantee percentages respectively
Clients choose the level that fits their need and budget. 100/100 costs most and may have restrictions (longer minimum term, age limits).
Why the other options are wrong
- BAge limits apply, but the numbers are guarantee percentages.
- CAsset mix is separate from guarantee levels.
- DFees follow from the level; the numbers are not fees.
Exam tip
First number = maturity, second = death. Higher = costlier.
Common mistake
Reversing the maturity and death percentages.
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:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
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