Segregated Funds & Annuities Certification Exam Study Guide with Complete Solutions!

Canadian Pension Plan Benefits - ANSWER-CPP Income Formula = 8.4% annual tax x number of years x CPP at age 65 RRSP Contributions - ANSWER-RRSP Contribution Room Formula = Income x 18% Market-Linked GIC - ANSWER-A market-linked GIC has an interest rate that is tied to the performance of the stock market, providing the potential for a higher interest rate in the case of positive market returns. While the returns can be capped, there is potential for more interest than other GIC products. Cashable GIC - ANSWER-Cashable GICs offer clients the opportunity to take out their money at any time but do have a lower interest rate in comparison to Fixed-rate GICs. Foreign Dividends - ANSWER-Foreign dividends are classified as interest and are taxed at his marginal tax rate. Only Canadian dividends qualify for the dividend tax credit. The dividend tax credit makes Canadian dividends more tax-efficient than foreign dividends. Annuity Advantages - ANSWER-Some advantages of annuities include: No worry about outliving one's money when a life annuity or joint and last survivor annuity is purchased. I If the annuity is prescribed, less tax may be due in the early years of payment. Only an annuity is guaranteed for life and can manage longevity risk. Canadian Investor Protection Fund (CIPF) - ANSWER-For stock investors, the CIPF (the Canadian Investor Protection Fund) provides investor protection in the case of dealer insolvency. In the case of dealer insolvency (but not market losses) The Canadian Investor Protection Fund (CIPF) and the Investor Protection Corporation (IPC) of the Mutual Fund Dealers Association (MFDA) insure MFDA members. The maximum amount of coverage is $1 million for each general account. Exchange Traded Fund (ETF) - ANSWER-Exchange-Traded Funds; are highly transparent are professionally managed have no-load fees allow for commodity investing by tracking an index are convenient to buy and sell