LLQP Segregated Funds and Annuities 5

Question 1

A client wants an annuity that will provide income for as long as either she or her spouse is alive. Which annuity type should be recommended?

Accepted Answer

Joint and last survivor annuity

Answer

A joint and last survivor annuity continues payments until the last surviving annuitant dies, making it ideal for couples.

Question 2

Which of the following is a potential disadvantage of irrevocably naming a beneficiary on a segregated fund contract?

Accepted Answer

The policyholder cannot change the beneficiary without the beneficiary's consent

Answer

When a beneficiary is named irrevocably, the policyholder loses the unilateral right to change or remove that beneficiary without their written consent.

Question 3

For LLQP purposes, what is the primary regulatory body overseeing segregated fund contracts in Canada?

Accepted Answer

Provincial insurance regulators

Answer

Segregated funds are insurance products regulated primarily by provincial insurance regulators, not securities regulators.

Question 4

A client who is age 70 purchases a deferred annuity. What is the primary tax consequence of the annual growth inside the contract?

Accepted Answer

It accumulates tax-deferred until withdrawals are made

Answer

Growth inside a deferred annuity accumulates on a tax-deferred basis; taxes are only triggered when funds are withdrawn or the annuity begins paying income.

Question 5

What happens to the death benefit of a segregated fund if the market value exceeds the guaranteed death benefit amount at the time of the annuitant's death?

Accepted Answer

The beneficiary receives the higher market value

Answer

The beneficiary receives the greater of the market value or the guaranteed death benefit, so if market value is higher, they receive the market value.

LLQP - Life License Qualification Program Practice Test

LLQP - Life License Qualification Program Practice Test

LLQP Segregated Funds and Annuities 5