LLQP Segregated Funds & Annuities · Component 2.1 · 30% of the exam
The 'net asset value per unit' of a segregated fund is:
- AThe guaranteed amount per unit that the insurer will pay at maturity or death
- Assets less liabilities, divided by units outstanding, at each valuation date
- CThe share price of the insurer that issues the contract, since the fund is part of the insurer
- DThe price the client paid per unit, which stays fixed for the life of the contract until maturity
Correct answer: B) Assets less liabilities, divided by units outstanding, at each valuation date
Contract value = units × NAV. Guarantees are separate from NAV and apply only at maturity or death.
Why the other options are wrong
- AThe guarantee is a contractual floor, not the unit price.
- CThe insurer's own share price has nothing to do with a fund's unit value.
- DThe unit value changes at every valuation date.
Exam tip
Contract value = units × current NAV; guarantees are separate.
Common mistake
Quoting the guaranteed amount as the current value.
What this tests
CISRO competency component 2.1 — 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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