LLQP Segregated Funds & Annuities · Component 3.2 · 25% of the exam
If the client's health changes between an annuity application and issue, the effect is:
- Generally none for a standard annuity; an impaired annuity's evidence basis may change and the insurer should be told
- BThe annuity is void, since a change in health between application and issue breaks the contract's insurability condition and the premium must be returned
- CThe annuity must be cancelled and reapplied for, so that the insurer can price it on the annuitant's current health
- DThe premium doubles, since the insurer reprices every annuity when the annuitant's health changes before issue
Correct answer: A) Generally none for a standard annuity; an impaired annuity's evidence basis may change and the insurer should be told
Standard annuities are not underwritten; impaired annuities depend on health evidence.
Why the other options are wrong
- BStandard annuities are unaffected by health changes.
- CA standard annuity need not be cancelled because of a health change.
- DA standard annuity's premium does not change with health.
Exam tip
Health changes: irrelevant to standard annuities; relevant to impaired.
Common mistake
Applying life insurance 'change in health' rules to a standard annuity.
What this tests
CISRO competency component 3.2 — 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.