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Segregated Funds & Annuities Mock Exam
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Segregated Funds & Annuities Mock Exam
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Segregated Funds & Annuities Mock ExamGroup Registered Retirement Savings Plan (GRRSP) - ANS-GRRSPs offer investors a
limited variety of investment choices, but they have lower fees compared with individual
RRSPs.
Cancellation of Segregated Fund Contract - ANS-An investor may cancel or rescind the
segregated fund contract in writing within the specific time limitation set by the insurer
providing the contract. Two days is the usual length of time permitted. The investor
receives the lesser of the amount of premium paid or value of fund units on that date if it
is a valuation date. If it is not a valuation date, then the value on the next valuation date
applies.
Advanced Deferred Life Annuity (ADLA) - ANS-A lifetime limit of 25% of the value of the
qualifying plan, to a total of $150,000 applies to ALDA purchases. The ALDA has the
ability to defer payments until the end of the year in which the annuitant reaches 85.
Therefore, the ALDA addresses longevity risk and ensures that investors with an RRIF
do not deplete their savings prematurely during retirement.
Defined Contribution Pension Plan (DCPP) - ANS-Because the money in the DCPP is
locked in, it can only be transferred into another locked-in account or left in the current
DCPP.
A variable payment life annuity is an option for members of a DCPP.
Registered Retirement Investment Fund (RRIF) - ANS-The minimum percentage of an
RRIF account that must be withdrawn yearly starts at age 65 and extends until age 95.
The percentage range starts at 4% at age 65 and goes to 20% at age 95. (4.7.2)
Group Savings Plans - ANS-Groups that offer savings and investment plans to their
members include employers, associations, and fraternal organizations. Group plans are
most often associated with employers. The six fundamental types of group savings
plans are:
Defined benefit pension plan (DBPP)
Defined contribution pension plan (DCPP)
Group registered retirement savings plan (GRRSP)
Deferred profit sharing plan (DPSP)
Tax-free savings account (TFSA)
Pooled registered pension plan (PRPP)
, Deferred Profit Sharing Plan (DPSP) - ANS-Deferred Profit Sharing Plan (DPSP) cannot
be withdrawn with the Home Buyers Plan (HBP), and a withdrawal from the DPSP
would trigger income taxes.
Balanced Funds - ANS-Balanced funds are also known as balanced growth or balanced
income funds. A balanced growth fund emphasizes stocks. A balanced income fund
emphasizes bonds. A balanced income fund would invest in more bonds than equities,
providing mostly income, but some growth. A balanced growth fund would primarily
provide growth with some income, while a small-cap fund would provide only growth
and a money market fund would provide minimal income and no growth.
Variable Payment Life Annuity (VPLA) - ANS-Transfers are made directly from each
type of plan if the plan administrator has established a VPLA arrangement. A minimum
of 10 retired members is required to implement the annuity. The VPLA requires that
periodic payments begin by the end of the year in which the member turns 71 or the end
of the calendar year in which the VPLA is acquired. This form of annuity may be subject
to provincial pension benefits standards legislation.
Accumulation Annuity - ANS-Members of a GRRSP may be provided with the
investment option of an accumulation annuity for their savings. The annuity pays
guaranteed interest for a fixed term or a date specified by the investor. Members may
also be given the payout option in the form of a term or life annuity when the
contribution terminates. The only investment option is the accumulation annuity.
The accumulation annuity contract requires its owner to make choices that centre on its
role as an investment and the term for investment. Designating where and when the
payments are to be received is not necessary until the policyholder begins to receive
the annuity payments. A POA is a good idea but not required.
Agent Expectations - ANS-The agent is expected to meet all expectations of the carrier
for volume of business, client contact, accuracy in dealing with the carrier and clients,
and necessary record keeping.
Segregated Funds - ANS-Segregated funds offer the guarantee that 75-100% of the
capital invested will be paid to the beneficiary.
There is no medical underwriting of an application for a segregated fund contract. This
means that the health of the contract's policy owner or annuitant is not assessed
because guarantees are based on the strength of the investment and not on a person's
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