LLQP Seg Funds key terms

An insurance contract that invests premiums in underlying funds and promises a minimum value at death or maturity, combining investment growth with guarantees backed by the insurer.

A guarantee that the beneficiary receives at least a stated percentage of deposits, or the highest reset value, when the annuitant dies, even if markets have fallen.

A guarantee that the contract holder receives at least a stated percentage of deposits, or the highest reset value, on the maturity date, regardless of the fund's market value.

A contractual feature that sets the current market value as a new floor for the death or maturity guarantee, typically available periodically or after a specified gain.

The date set in the contract when the maturity guarantee is payable; it is usually many years after issue and may be extended depending on the contract terms.

The percentage of net deposits protected by the death and maturity guarantees, commonly 75% or 100%, selected by the client when the contract is purchased.

The potential shielding of contract values from the policyholder's creditors when a qualifying beneficiary such as a spouse or child is named and provincial insurance rules are met.

The person or entity named in the contract to receive the death benefit; a valid designation can let proceeds bypass the estate and support creditor protection.

The person whose life is used to trigger the death benefit; in many contracts the annuitant is also the contract holder, but the roles can differ.

The owner of the segregated fund contract who pays premiums, chooses funds, names beneficiaries, and controls the contract; the owner may differ from the annuitant.

The required disclosure document describing a segregated fund contract's guarantees, fees, objectives, risks, and fund choices; it must be available to the client before or at sale.

A brief, plain-language document summarizing a segregated fund's costs, performance, and key features so clients can compare options before investing.

A written explanation of how an advisor or insurer manages situations where their interests may conflict with the client's, including compensation arrangements with fund providers.

A cancellation window after the contract is delivered, often ten days, during which the client can return it and receive a refund subject to the contract's terms.

The management expense ratio covers fund management and the cost of insurance guarantees; it reduces the client's return and must be disclosed clearly.

The process of gathering and documenting a client's financial situation, goals, risk tolerance, time horizon, and knowledge so that suitable recommendations can be made.

The judgment that a recommended contract, guarantee level, and fund mix fit the client's documented objectives, risk profile, time horizon, and financial circumstances.

The amount of investment loss a client is emotionally and financially willing to accept; it shapes asset allocation and fund selection within the contract.

The client's actual financial ability to absorb losses without jeopardizing essential goals; it must be assessed separately from emotional risk tolerance.

The length of time a client plans to hold the investment before needing the money; it affects fund choice and the value of the maturity guarantee.

The mix of equity, fixed income, and cash investments selected for a client; in a segregated fund contract it is implemented by choosing among the available underlying funds.

Spreading money across different funds, asset classes, sectors, and regions so that poor results in one holding have less impact on the overall portfolio.

A structured fact-finding conversation in which the advisor identifies the client's financial gaps, goals, and concerns before recommending any product or strategy.

The step where the issued contract is given to the client and its terms, guarantees, fees, beneficiary designation, and free look rights are reviewed.

Surrendering, redeeming, or transferring an existing insurance or investment product to buy a new segregated fund contract; it triggers comparison and disclosure requirements.

A written notice explaining the costs, lost benefits, and consequences of replacing an existing contract, given to the client and usually to the existing insurer.

A periodic meeting to reassess the client's goals, risk profile, fund performance, beneficiary designations, and whether a guarantee reset or change is appropriate.

A periodic report showing the contract's value, transactions, fund performance, and guarantee levels, helping the client monitor progress and confirm suitability.

The original cost of a non-registered investment adjusted for reinvested distributions and returns of capital; it is used to calculate the capital gain or loss on redemption.

The increase in value of a non-registered segregated fund holding when it is redeemed or sold; in Canada part of the gain is included in taxable income.

A tax rule treating a deceased person's non-registered investments as sold at fair market value just before death, which can trigger capital gains tax.

A tax deferral allowing a deceased person's investments to transfer to a spouse or common-law partner without immediate tax when the legal conditions are satisfied.

A tax-sheltered account such as an RRSP, TFSA, or RRIF that can hold segregated funds; growth is deferred or tax-free and withdrawals follow the plan's tax rules.

A segregated fund contract held outside registered plans; investment income and capital gains are taxable to the contract holder annually or when redeemed.

Moving money from one underlying fund to another within the same contract; outside registered plans it is generally treated as a taxable disposition.