IFC Segregated Funds 3

Question 1

What license must a representative hold to legally sell segregated funds in Canada?

Accepted Answer

A life insurance license issued under provincial insurance legislation

Answer

Because segregated funds are insurance products, representatives must be licensed to sell life insurance under provincial insurance legislation, not a securities license.

Question 2

What disclosure document for segregated funds is analogous to a mutual fund's Fund Facts?

Accepted Answer

Information Folder and Contract

Answer

Segregated funds use an Information Folder and insurance Contract for client disclosure rather than a simplified prospectus, reflecting the insurance regulatory framework.

Question 3

Under which legislative framework are segregated funds in Canada primarily governed?

Accepted Answer

The federal Insurance Companies Act and provincial insurance acts

Answer

Segregated funds fall under the federal Insurance Companies Act and corresponding provincial insurance legislation because they are issued by life insurance companies.

Question 4

Which of the following is NOT a feature that distinguishes segregated funds from mutual funds?

Accepted Answer

Daily pricing and liquidity for redemptions

Answer

Both segregated funds and mutual funds offer daily pricing and redemption; the features unique to segregated funds are maturity guarantees, potential creditor protection, and beneficiary designations.

Question 5

Which organization provides oversight of life insurance agents who sell segregated funds in Canada?

Accepted Answer

Provincial insurance regulators and life insurance councils

Answer

Life insurance agents selling segregated funds are regulated by provincial insurance regulators and life insurance councils, consistent with the provincial insurance licensing framework.

IFC - Investment Funds in Canada Practice Test

IFC - Investment Funds in Canada Practice Test

IFC Segregated Funds 3