Score Higher on Verified LLQP | Life License Qualification Program (LLQP) Exam Questions with Answers

According to the LLQP Segregated Funds and Annuities curriculum, the suitability of an investment must reflect the client’s risk tolerance, time horizon, liquidity needs, and estate planning objectives. Gaston’s situation presents several clear requirements that narrow the choice considerably.

First, Gaston wants a safe investment with a relatively short, defined time horizon of five years (from age 60 to 65). This rules out equity-based investments, as they involve higher volatility and market risk, making Option D (equity segregated fund) unsuitable. Capital preservation is clearly a priority.

Second, Gaston wants the investment to mature at retirement, while still allowing him to withdraw funds easily at any time if needed. This is a crucial factor. Accumulation annuities generally restrict access to capital and may impose surrender charges, making them inappropriate for someone who wants flexible access to funds. Similarly, a prescribed life annuity is an income product designed to pay income immediately and does not allow withdrawals or access to capital once purchased, eliminating Option A.

A fixed-income segregated fund is specifically designed to meet needs like Gaston’s. As outlined in the LLQP study guide, fixed-income segregated funds invest primarily in bonds or similar low-risk assets, offering stability and reduced volatility. They also allow redemptions (withdrawals) at any time, subject to potential market value adjustments or fees, providing the liquidity Gaston wants.

Additionally, segregated funds allow the contract owner to name a beneficiary, including someone other than a spouse, such as Gaston’s nephew. The death benefit guarantee further ensures that a minimum amount will pass directly to the beneficiary, often bypassing probate—an important estate planning benefit highlighted in the LLQP curriculum.

Therefore, based on safety, liquidity, time horizon, and beneficiary designation, the investment that best suits Gaston’s needs is a fixed-income segregated fund, making Option B the correct and fully verified answer.

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.

A birth certificate is used for identity verification, not for determining investment goals, risk tolerance, or financial needs. An investor profile is built from documents that demonstrate financial assets, liabilities, income, and personal objectives.

Exact Extract:

"Information used to determine an investor profile includes assets, liabilities, income, investment objectives, and risk tolerance. Identification documents like birth certificates are not relevant to determining investment needs."

(Reference: Segfunds-E313-2020-12-7ED, Chapter 4.1 Financial Situation of the Investor?)