IFSE Institute Updated LLQP Exam Questions and Answers by bobbie

Adeferred payout term annuityinvolves depositing funds now with payments starting after a deferment period (in Julia’s case, 3 years) and continuing for a set term (10 years).

Exact Extract:

"A deferred payout annuity begins income payments after a specified deferment period. If a fixed period is selected, it is known as a term annuity."

(Reference:Segfunds-E313-2020-12-7ED, Chapter 3.2.1.1 Payout Annuity​)

Since Jim is buying the annuity for himself and will receive the payments,he must be named as the annuitanton the application.

Exact Extract:

"The annuitant is the person on whose life the annuity is based and who is entitled to receive the periodic payments. In this case, it must be Jim."

(Reference:Segfunds-E313-2020-12-7ED, Chapter 3.2.2 Lives Covered【45:2†Segfunds-E313-2020-12-7ED.pdf**)

Keisha’s investment portfolio is highly concentrated in Belmont Inc. common shares, which include her TFSA and defined contribution pension plan (DCPP). This significant exposure to a single company’s stock poses a risk because the value of her investments is directly tied to the financial performance of Belmont Inc. Diversification is a key strategy to mitigate risk by spreading investments across various asset classes, industries, or geographic regions. This can reduce the impact of poor performance in any one area on the overall portfolio. According to LLQP content, one of the primary goals in managing an investment portfolio is to ensure appropriate diversification to avoid over-reliance on a single asset or asset type​​.

While other needs, like liquidity and emergency fund savings, are important, Keisha's immediate concern should be diversification. Her current investments do not provide adequate protectionagainst company-specific risks, such as the potential downturns specific to Belmont Inc. This aligns with LLQP principles, which emphasize diversification as a way to manage risk effectively and achieve a more stable financial outcome​.

Larson’s recommendation for Julia to open a TFSA and invest in a money market fund is a strategy aimed at building a readily accessible emergency fund. This fund can help mitigate the risk of unforeseen expenses, which is a common financial risk. According to LLQP principles, creating an emergency fund within a TFSA provides tax-free growth and easy access to funds for unexpected costs, such as repairs, medical expenses, or temporary income loss​​.

Options A, B, and C are incorrect as they relate to specific risks not directly addressed by the creation of an emergency fund. A TFSA primarily provides liquidity for unexpected expenses rather than addressing job loss, bankruptcy, or leveraging.