LLQP Practice Test

LLQP Segregated Funds Practice Questions

Segregated Funds makes up 6 of every 50 questions on a Tigertest LLQP practice test. Here are 10 of the 24 questions on it, each with the answer and the reason.

Updated 2026-11-10 by the Tigertest team. Based on the harmonized LLQP's four modules, Canadian law and CCIR/CISRO guidance as of November 2026. Original questions; 50 per test, mixing the modules in proportion. Not affiliated with CISRO, any provincial regulator or the AMF.

1. 1. Who legally owns the assets held in a segregated fund?

   • A.The beneficiary
   • B.The insurance company
   • C.The contract holder
   • D.The fund's custodian bank

   Answer: B. A segregated fund contract is an insurance contract. The insurer owns the fund's assets, kept separate from its general funds; the contract holder owns rights under the contract, measured in notional units.

2. 2. Seg fund units held by a contract holder are called notional units because:

   • A.They can be sold on an exchange
   • B.They are owned outright by the beneficiary
   • C.They pay no growth at all
   • D.They only measure the contract's value

   Answer: D. The units do not give ownership of fund assets; they are used to calculate the value of the contract and its benefits.

3. 3. Under the industry guideline for segregated funds, the maturity guarantee must be at least what share of deposits?

   • A.75%
   • B.100%
   • C.50%
   • D.90%

   Answer: A. Seg fund contracts must guarantee at least 75% of deposits (less withdrawals) at maturity and on death. Many contracts offer 100% at a higher fee.

4. 4. The minimum term before a seg fund maturity guarantee applies is generally:

   • A.3 years
   • B.20 years
   • C.10 years
   • D.5 years

   Answer: C. The maturity date must be at least 10 years after the contract is issued (or the deposit is made, depending on the contract).

5. 5. Malik deposited 80,000 dollars in a seg fund with a 75% maturity guarantee. At maturity the contract is worth 52,000 dollars. What does he receive?

   • A.80,000 dollars
   • B.8,000 dollars
   • C.60,000 dollars
   • D.52,000 dollars

   Answer: C. The guarantee is 75% of 80,000 = 60,000. The market value is lower, so the insurer tops it up by 8,000 to pay the guaranteed 60,000.

6. 6. A seg fund death benefit guarantee of 100% means that on the annuitant's death the beneficiary receives:

   • A.The higher of market value or deposits
   • B.Twice the market value on the date of death
   • C.Deposits plus 100% interest
   • D.Only the market value at death

   Answer: A. The death benefit pays the higher of the contract's market value and the guaranteed amount, less proportional reductions for withdrawals.

7. 7. A reset feature on a seg fund contract lets the holder:

   • A.Cut the management fee each year
   • B.Cancel the contract for free
   • C.Switch to a mutual fund at no cost
   • D.Lock in gains as the new guarantee

   Answer: D. A reset raises the guaranteed amount to the current market value. It usually also restarts the 10-year term to maturity.

8. 8. A seg fund contract holder makes a withdrawal. How does it usually affect the guarantee?

   • A.It cancels the guarantee entirely for good
   • B.It cuts the guarantee in proportion
   • C.It has no effect on the guarantee
   • D.It raises the guaranteed amount

   Answer: B. Most contracts reduce the guaranteed amount in proportion to the share of market value withdrawn.

9. 9. Why might a business owner prefer seg funds to mutual funds?

   • A.Direct ownership of the fund's shares
   • B.Possible protection from creditors
   • C.Lower fees in every case
   • D.Guaranteed growth each year

   Answer: B. With a family-class or irrevocable beneficiary, seg fund contracts can be protected from the owner's creditors in common-law provinces (and with the family designations in Quebec). Fees are usually higher than mutual funds.

10. 10. On death, a seg fund death benefit paid to a named beneficiary:

    • A.Is frozen for a year after death
    • B.Is paid to the insurer first
    • C.Must pass through the owner's will
    • D.Bypasses the estate and probate

    Answer: D. Because it is an insurance contract, the benefit goes straight to the named beneficiary, outside the estate.