LLQP Segregated Funds & Annuities · Component 2.2 · 30% of the exam
Which client benefits LEAST from a segregated fund's features?
- AA professional at risk of lawsuits who wants to keep personal savings beyond the reach of claimants and their lawyers
- BAn older investor who wants assets to pass to children quickly and privately at death
- CA business owner with liability exposure who has named a spouse as beneficiary
- A young investor with a long horizon, no dependants, no creditor concerns and a preference for low cost
Correct answer: D) A young investor with a long horizon, no dependants, no creditor concerns and a preference for low cost
Suitability includes recognizing when the features are not worth the cost. Low-cost alternatives may serve such a client better.
Why the other options are wrong
- ACreditor protection is valuable to this client.
- BThe death guarantee and probate bypass are valuable to this client.
- CCreditor protection is valuable to this client.
Exam tip
Seg funds add value when guarantees, estate or creditor features match a need.
Common mistake
Selling seg funds to every client regardless of need.
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.