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LLQP (life licence)

LifeLLQP Life Insurance✓A&SLLQP Accident & Sickness Insurance Seg FundsLLQP Segregated Funds & Annuities EthicsLLQP Ethics & Professional Practice (Common Law)

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Segregated Funds and Annuities · Component 2: products (30%)

Annuities & Group Retirement Plans

Annuities turn capital into guaranteed income; group plans build it. Know which features raise or lower payments and who bears the risk.

Analyze the available products2 min read5 sections

Must-know for the exam

Straight life annuities pay the most and stop at death; guarantee periods, refunds, joint-survivor and indexing all lower payments.
Older age, worse health (impaired annuities), higher interest rates and male gender raise payments.
Cash refund: lump sum of premium minus payments made; installment refund: payments continue until the premium is returned.
Registered annuity payments are fully taxable; prescribed non-registered annuities tax a levelled interest portion.
DB plans promise a pension by formula and the employer bears investment risk; DC plans and group RRSPs put that risk on the member.
Group RRSP contributions vest immediately; DPSPs may require up to 2 years; only employers contribute to DPSPs ($17,695 limit in 2026).
A pension adjustment reduces next year's RRSP room.
CAPSA Guideline No. 3 sets duties for sponsors, providers and members of capital accumulation plans.

On this page · 5 sections

Traps that cost marks

Thinking annuity capital stays accessible.
Choosing a life annuity when a fixed period is wanted.
Assuming every annuity has a refund.
Forgetting the guarantee period continues after death.
Thinking the guarantee restarts after it ends.
Choosing an annuity on only one life.
Missing the trade-off between joint and survivor payments.
Thinking added features increase payments.

Why it matters on the exam

Expect scenarios choosing an annuity type and calculations on DB formulas, refunds and RRSP room after a PA.

Annuity features

Feature	Effect on payment	Why
Guarantee period	Lower	Pays even after early death
Joint and last survivor	Lower	Pays to the second death
Indexing	Lower to start	Payments rise each year
Impaired health	Higher	Shorter life expectancy
Higher rates at purchase	Higher	Premium earns more

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Exam-style questions

Bea, 73, a widowed former shop owner in Brandon, Manitoba, used $150,000 of her non-registered savings to buy a straight life annuity after comparing quotes from three insurers. Her will leaves everything to her two daughters. She dies of a stroke after receiving 2 years of payments. What do her heirs receive from the annuity?
Carl, 66, a retired electrician in Moncton, New Brunswick, buys a life annuity with a 15-year guarantee and names his wife, Marisol, 60, as beneficiary. He dies after receiving payments for 6 years. What happens?
Carl bought a life annuity with a 15-year guarantee at age 65 and named his niece as beneficiary. He lived well into his eighties and had received 18 years of payments when he died at 83. His niece calls the insurer to ask what she is entitled to. What does his beneficiary receive?

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