LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
'Longevity risk' is:
- AThe risk that markets decline just before the money is needed, permanently reducing capital
- The risk of outliving one's savings, addressed by life annuities or conservative withdrawals
- CThe risk that inflation erodes purchasing power over a retirement that lasts thirty years
- DThe risk of dying early, before the savings accumulated for retirement have been enjoyed
Correct answer: B) The risk of outliving one's savings, addressed by life annuities or conservative withdrawals
Longevity risk is the defining retirement risk that annuities uniquely address by pooling. Segregated fund guaranteed withdrawal features also target it.
Why the other options are wrong
- AMarket risk is separate from longevity.
- CInflation is a separate risk with its own remedies.
- DEarly death is the life insurance risk, not longevity risk.
Exam tip
Longevity risk → life annuity or lifetime withdrawal guarantee.
Common mistake
Planning income only to average life expectancy.
What this tests
CISRO competency component 1.3 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
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