IFSE Institute LLQP Exam - Topic 4 Question 3 Discussion

Actual exam question for IFSE Institute's LLQP exam

Question #: 3
Topic #: 4

[All LLQP Questions]

Jessica is 61 years old and has $460,000 invested in a registered retirement savings plan (RRSP). She is retiring due to health issues that are expected to reduce her life expectancy and will prevent her from working until she is 65. She would like to transfer her RRSP funds into an annuity that will pay her monthly benefits for the rest of her life.

Which of the following annuities is the BEST option for her to purchase?

ATerm annuity to age 90.

BLife annuity.

CLife annuity with a 20-year guaranteed period.

DImpaired life annuity.

Show Suggested Answer

Suggested Answer: D

Due to Jessica's reduced life expectancy, an impaired life annuity would provide higher monthly payments than a standard life annuity. This type of annuity takes her medical condition into account, offering larger payouts based on a shorter expected payment period. LLQP resources recommend impaired life annuities for individuals with significant health issues, as these provide better income compared to other types.

Options A and C offer a fixed period but don't maximize monthly income for someone with a reduced life expectancy. Option B would provide a standard income for life but not the potentially enhanced income from an impaired annuity.

by Cecily at Oct 20, 2024, 07:38 PM

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Glenna

4 months ago

Definitely not a term annuity, she needs lifelong security.

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Terrilyn

4 months ago

Term annuity to age 90? That’s risky for someone retiring early!

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Marva

4 months ago

Wait, why not the impaired life annuity? Isn’t that better for health issues?

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Robt

5 months ago

I agree, a life annuity provides steady income for life.

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Joaquin

5 months ago

Life annuity seems like the safest bet for her.

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Crista

5 months ago

I recall that a life annuity with a guaranteed period offers some security, but I wonder if that’s necessary for Jessica given her situation.

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King

5 months ago

I practiced a similar question where we had to choose between life annuities and term annuities. I feel like the life annuity might be the safest choice for her.

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Juan

5 months ago

I think the impaired life annuity could be a good option since it takes her health into account, but I’m not completely confident about the details.

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Albert

6 months ago

I remember studying about different types of annuities, but I'm not sure which one is best for Jessica given her health issues.

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Marshall

6 months ago

I'm a bit confused by the differences between the annuity options. I'll need to review the key features of each one to determine the best fit for Jessica's situation.

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Laticia

6 months ago

The life annuity with a 20-year guaranteed period seems like a good balance between providing income for life and having a guaranteed minimum payout period.

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Beata

6 months ago

Hmm, the reduced life expectancy is an important factor here. I'm leaning towards the impaired life annuity, but I'll need to double-check the details.

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Edelmira

6 months ago

This seems like a straightforward question, but I want to make sure I understand the options fully before selecting an answer.

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Noelia

1 year ago

Wait, what's an 'impaired life annuity'? Is that like a discount for having a shorter life expectancy? That's kind of morbid, don't you think?

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Reena

1 year ago

Hmm, I'm not so sure. I think the life annuity with a 20-year guaranteed period (C) might be a better option. It'll provide her with a steady income for life, and the guaranteed period could give her some peace of mind.

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Onita

1 year ago

I agree with Jeffrey. The impaired life annuity seems like the most appropriate choice for Jessica's situation. She needs the income now, and this option will give her the highest monthly benefits.

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Alida

1 year ago

C) Life annuity with a 20-year guaranteed period.

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Johna

1 year ago

B) Life annuity.

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Chantay

1 year ago

A) Term annuity to age 90.

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Jeffrey

1 year ago

I think the best option for Jessica would be the impaired life annuity (D). Given her reduced life expectancy, this will provide her with the highest monthly payments for the rest of her life.

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