LLQP Segregated Funds & Annuities · Component 2.1 · 30% of the exam
Within a segregated fund contract, the client can typically:
- Allocate deposits among several funds and switch between them, with guarantees at the contract level
- BNever change funds after the initial deposit, since the guarantee is priced on the fund chosen at issue
- CHold only one fund per contract, so a client wanting diversification must open several contracts
- DBuy individual stocks and bonds directly, since the insurer acts as a broker for the contract holder
Correct answer: A) Allocate deposits among several funds and switch between them, with guarantees at the contract level
Contracts offer a menu of funds. Switching flexibility is a feature; some contracts limit free switches per year.
Why the other options are wrong
- BSwitching is permitted within the contract.
- CMultiple funds under one contract are usual.
- DSegregated fund contracts hold funds, not direct securities.
Exam tip
One contract, many funds; switch within limits; guarantees at contract level.
Common mistake
Assuming each fund has its own separate guarantee.
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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