LLQP Segregated Funds & Annuities · Component 2.4 · 30% of the exam
The sponsor's responsibilities under the CAP Guidelines include:
- AGuaranteeing that members' accounts will not lose value in any year of the plan
- BNothing beyond remitting contributions, since the provider is responsible for the plan's operation
- Selecting prudent options, informing members, reviewing providers and options, and disclosing fees
- DChoosing investments for each member according to the member's age and salary, and adjusting them each year
Correct answer: C) Selecting prudent options, informing members, reviewing providers and options, and disclosing fees
Sponsors are not guarantors but have governance duties. Agents serving group plans support these duties.
Why the other options are wrong
- AThere is no guarantee in a capital accumulation plan.
- BThe sponsor's duties are substantial.
- DMembers choose; sponsors provide the options.
Exam tip
CAP sponsor: prudent options, education, review, fee disclosure.
Common mistake
Telling a sponsor they have no liability for the plan's investment line-up.
What this tests
CISRO competency component 2.4 — 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.