LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
The 'free-look' or rescission right for a segregated fund contract allows the client to:
- Cancel within a short period after receiving the contract and recover the deposit or market value, per the terms
- BCancel at any time during the first year and receive the full deposit back regardless of what the market has done
- CChange the guarantee level later without a new application, once the client has seen the contract
- DNothing beyond reading the contract, since a segregated fund cannot be rescinded once issued
Correct answer: A) Cancel within a short period after receiving the contract and recover the deposit or market value, per the terms
Rescission rights exist but the refund basis varies. Agents must state the contract's actual terms.
Why the other options are wrong
- BThe rescission window is short; there is no open-ended right to cancel.
- CGuarantee changes are a separate matter.
- DA rescission right exists.
Exam tip
Rescission: short window; refund basis per contract.
Common mistake
Promising a full-deposit refund regardless of market value when the contract says otherwise.
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.