LLQP Segregated Funds & Annuities · Component 2.3 · 30% of the exam
The factors that determine the income from a life annuity include:
- AThe insurer's size and brand, since larger insurers can afford to pay higher incomes
- BThe agent's commission rate only, since everything else is set by regulation
- The premium, the annuitant's age and sex, interest rates, guarantee period, joint or single, and indexing
- DThe client's occupation and earnings history, since higher earners live longer and receive lower payments as a result
Correct answer: C) The premium, the annuitant's age and sex, interest rates, guarantee period, joint or single, and indexing
Age and interest rates dominate: older annuitants and higher rates mean higher income. Guarantees and joint forms reduce it.
Why the other options are wrong
- AThe insurer's brand has no bearing on annuity pricing.
- BCommission is not a pricing input.
- DOccupation is irrelevant to annuity pricing.
Exam tip
Annuity income: premium, age, sex, rates, guarantee, joint/single, indexing.
Common mistake
Expecting the same annuity income regardless of interest rates.
What this tests
CISRO competency component 2.3 — 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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