LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
When choosing between 75/75 and 100/100 guarantee levels, the agent should consider:
- AOnly the fee difference, since the guarantee levels are otherwise identical in every respect that matters
- BOnly the client's age, since insurers set the guarantee level automatically according to the annuitant's age band
- CNothing in particular, since the higher level is always the safer recommendation for the client
- The need for capital certainty, the fund's volatility, horizon versus term, the fee difference and age limits
Correct answer: D) The need for capital certainty, the fund's volatility, horizon versus term, the fee difference and age limits
Guarantee level is a cost–benefit decision. A 100% guarantee on a bond fund is rarely worth its fee; on an equity fund for a risk-averse client it may be.
Why the other options are wrong
- AThe fee is only one input to the guarantee-level decision.
- BAge is only one input; volatility, horizon and need matter as well.
- CIt is a key design choice with a cost.
Exam tip
Higher guarantee where volatility is high and certainty matters; check fee and age limits.
Common mistake
Paying for a 100% guarantee on a money market fund.
What this tests
CISRO competency component 3.1 — 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.