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Segregated Funds And Annuities Exam Version 2 And Practice Exam Newest 2025 Exam Complete 300 Questions And Correct Detailed Answers (Verified Answers) |Already Graded A+
What happens to the deposits made in a segregated fund contract? - ANSWER-Deposits are the insurer's property, and the insurer must own the segregated funds and their assets.
What are the disadvantages of investing in segregated funds? - ANSWER-A minimum 10-year term-to-maturity, higher management expense ratio (MER) fees, and possible age restrictions.
What is the average management expense ratio (MER) for segregated funds compared to mutual funds? - ANSWER-The average MER for segregated funds is 2.90%, while for mutual funds it is 2.5%.
What is the maturity guarantee in segregated fund contracts? - ANSWER-If the fund's market value is less than the original investment at maturity, the investor will receive at least 75% of the sum invested. 1 / 4
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What is the death benefit guarantee in segregated funds? - ANSWER-If the market value exceeds the 75% guarantee, the beneficiary receives the market value; if it is less, they receive at least 75% of the sum invested.
What is the Guaranteed Minimum Withdrawal Benefit (GMWB)? - ANSWER-It is suitable for individuals wanting a guaranteed income stream for a specific period with downside protection and potential market growth.
What is the Guaranteed Lifetime Withdrawal Benefit (GLWB)?
- ANSWER-It ensures guaranteed lifetime income and potential
for increased income if investments perform well.
What is a risk associated with investing in segregated funds? - ANSWER-There is a risk of loss of up to 25% of the investment due to the 75% maturity guarantee.
How do withdrawals affect the guarantees in segregated funds? - ANSWER-Withdrawals reduce the sum the guarantees are calculated on, but the percentages (75% or 100%) remain the same. 2 / 4
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What happens if a withdrawal is made before the contract matures? - ANSWER-The investor receives the market value of the units minus any sales charge, and the 75% guarantee does not apply.
What is the benefit of naming a beneficiary for a segregated fund? - ANSWER-Benefits will not be subject to probate fees.
What is probate? - ANSWER-An official process that verifies that a will is real.
What may reduce the death benefit in a segregated fund? - ANSWER-Withdrawals and sales charges.
What is the potential upside of segregated funds? - ANSWER- There is no maximum value for the segregated fund, allowing for unlimited upside potential.
What is the role of Assuris in relation to segregated funds? - ANSWER-Assuris provides investor protection against insurer insolvency or bankruptcy but does not protect against market losses. 3 / 4
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What is the importance of selecting the right owner(s), annuitant(s), and beneficiaries in a segregated fund contract? - ANSWER-Proper selection aligns with the client's goals and complies with tax rules.
What is the typical term-to-maturity for segregated funds? - ANSWER-A minimum of 10 years.
What is a potential limitation imposed by tax rules on segregated funds? - ANSWER-The owner must be the annuitant for registered contracts like RRSPs.
What happens to the market value of a segregated fund at maturity if it exceeds 75%? - ANSWER-Individuals receive the market value.
What happens to the maturity and death benefit guarantees when a withdrawal is made from a segregated fund? - ANSWER-They are reduced, and the insurer recalculates the new guarantees according to the contract terms.
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