LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
Segregated funds held within an RRSP or TFSA:
- AHave no fees, since the plan's tax-sheltered status covers the insurer's costs
- BLose the guarantees, since registered plans are governed by the Income Tax Act rather than insurance law
- Retain the guarantees and beneficiary designation, with the plan's tax rules applying
- DCannot be held, since only securities and deposits are eligible investments for registered plans
Correct answer: C) Retain the guarantees and beneficiary designation, with the plan's tax rules applying
Seg funds are eligible registered investments. Guarantees and designations work the same; probate bypass and creditor considerations also apply to registered plans with named beneficiaries.
Why the other options are wrong
- AFees apply whether registered or not.
- BGuarantees persist inside registered plans.
- DSegregated funds are eligible investments for RRSPs and TFSAs.
Exam tip
Registered seg funds: same guarantees and designations; plan tax rules govern.
Common mistake
Telling a client guarantees do not apply inside an RRSP.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.