LLQP Segregated Funds & Annuities · Component 3.2 · 25% of the exam
The rescission (free-look) right for segregated funds must be:
- ALeft out of the delivery discussion, since drawing attention to it encourages clients to cancel contracts
- BWaived in writing by the client at delivery, so that the deposit can be invested without a holding period
- Explained at delivery, with the time limit, the refund basis and how to exercise it
- DExtended by the agent at the client's request, since the agent represents the insurer at delivery
Correct answer: C) Explained at delivery, with the time limit, the refund basis and how to exercise it
Delivery obligations include explaining rescission. Agents cannot waive or extend it.
Why the other options are wrong
- AThe rescission right must be disclosed, never hidden.
- BThe rescission right cannot be waived by the client or the agent.
- DThe agent has no authority to extend it.
Exam tip
Explain rescission: window, refund basis, how to exercise.
Common mistake
Not mentioning rescission at delivery.
What this tests
CISRO competency component 3.2 — 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.