LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
Recommending a GMWB contract is most suitable for:
- AA client who needs full liquidity, since the guaranteed withdrawal can be taken at any time without penalty
- A retiree or near-retiree who wants guaranteed lifetime income with market participation and an estate value
- CA 25-year-old saver, since the bonuses credited during years without withdrawals build the base for decades
- DA client who wants the lowest cost, since the withdrawal guarantee replaces the need for a maturity guarantee
Correct answer: B) A retiree or near-retiree who wants guaranteed lifetime income with market participation and an estate value
GMWB products address longevity and sequence risk for the decumulation phase. They are too costly and irrelevant for young accumulators.
Why the other options are wrong
- AExcess withdrawals damage the guarantee.
- CToo early and too costly for an accumulator.
- DGMWB contracts carry high fees.
Exam tip
GMWB: near-retirees wanting lifetime income + flexibility + estate value.
Common mistake
Selling a GMWB to an accumulator decades from withdrawal.
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.