Segregated Funds
KNOWLEDGE EXPECTED OF: QAFP® Professionals
Highest Knowledge Level: Evaluation
Knowledge Levels and Associated Verbs
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Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
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Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
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Application
Ability to put information to use / to use knowledge for relevant, practical purposes
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Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
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Hold cursor over or click on each term to read its definition.
- Define a segregated fund.
- Identify the purpose for which segregated funds may be used.
- Identify that segregated funds require an insurance license for an individual to act in furtherance of a trade.
- Identify that segregated funds must be approved by the insurance administrator of the province/territory in which they are traded.
- Identify that segregated funds are classified as individual variable insurance contracts.
- Determine how each of these factors may impact the suitability of a segregated fund:
- Time horizon
- Volatility
- Risk tolerance
- Investment objective
- Financial situation
- Personal situation
- Income
- Liquidity
- Control
- Tax impact
- Investment management process
- Economic cycle
- Cost
- Historical performance
- Performance expectations
- Evaluate how each of the factors may impact the suitability of a segregated fund.
- Explain for whom a segregated fund may be suitable.
- Explain parties to a segregated fund, such as:
- Contract holder
- Annuitant
- Beneficiary
- Explain that a segregated fund is a contract between the issuer and the holder of the contract.
- Explain that segregated funds are offered via an information folder by insurance companies and fraternal organizations.
- Explain types of sales charges that may be charged on a segregated fund, such as:
- No-load
- Low-load
- Front-end
- Back-end or deferred sales charge
- Explain fees associated with segregated funds, such as:
- Trailer fee
- Management fee
- Management expense ratio
- Trading expense ratio
- Early redemption fee
- Switching fees
- Operating expenses
- Insurance premium
- Explain how a segregated fund assigns notional units to the contract holder.
- Explain the minimum regulatory duration and value guarantees for segregated fund holders.
- Death benefit
- Maturity benefit
- Explain how resets may affect the guarantees of a segregated fund.
- Explain how contributions / withdrawals may affect the guarantees of a segregated fund.
- Explain potential protections of a segregated fund, such as:
- Creditor protection
- Probate avoidance
- Explain the circumstances required for credit protection to be active for a segregated fund.
- Explain how income earned by a segregated fund is handled when distributed to unitholders of the segregated fund.
- For capital gains and losses
- Time-weighted
- Explain the impact of an allocation of income from a segregated fund on the net asset value per unit (NAVPU).
- Explain that the return of a segregated fund may be presented before the fund expenses have been deducted from the gross return of the fund.
- Define a guaranteed minimum withdrawal benefit plan.
- Identify that a guaranteed minimum withdrawal benefit plan allows for potential capital growth through participation in the market, while guaranteeing a minimum withdrawal each year.
- Identify that minimum and maximum ages exist to invest in a guaranteed minimum withdrawal plan.
- Identify that resets to the guaranteed withdrawal may occur every three years, based on growth in the plan.
- Identify that bonuses that increase the guaranteed withdrawal may be available for each year that a withdrawal does not occur.
- Identify that resets and bonuses may increase the guaranteed withdrawal amount, but do not add to the market value of the plan.
- Identify that guaranteed minimum withdrawal benefit plans may have death guarantees.
- Explain fees associated with guaranteed minimum withdrawal benefit plans, such as:
- Trading expenses
- Management expenses
- Administration expenses
- Insurance premiums
- Guarantee premiums
- Withdrawal fees
- Sales charges
KNOWLEDGE EXPECTED OF: CFP® Professionals
Highest Knowledge Level: Evaluation
Knowledge Levels and Associated Verbs
|
Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
|
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
|
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
|
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
|
||||||
|---|---|---|---|---|---|---|---|---|---|
|
Define
To state exactly the meaning of
|
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
|
Hold cursor over or click on each term to read its definition.
- Define a segregated fund.
- Identify the purpose for which segregated funds may be used.
- Identify that segregated funds require an insurance license for an individual to act in furtherance of a trade.
- Identify that segregated funds must be approved by the insurance administrator of the province/territory in which they are traded.
- Identify that segregated funds are classified as individual variable insurance contracts.
- Determine how each of these factors may impact the suitability of a segregated fund:
- Time horizon
- Volatility
- Risk tolerance
- Investment objective
- Financial situation
- Personal situation
- Income
- Liquidity
- Control
- Tax impact
- Investment management process
- Economic cycle
- Cost
- Historical performance
- Performance expectations
- Evaluate how each of the factors may impact the suitability of a segregated fund.
- Explain for whom a segregated fund may be suitable.
- Explain parties to a segregated fund, such as:
- Contract holder
- Annuitant
- Beneficiary
- Explain that a segregated fund is a contract between the issuer and the holder of the contract.
- Explain that segregated funds are offered via an information folder by insurance companies and fraternal organizations.
- Explain types of sales charges that may be charged on a segregated fund, such as:
- No-load
- Low-load
- Front-end
- Back-end or deferred sales charge
- Explain fees associated with segregated funds, such as:
- Trailer fee
- Management fee
- Management expense ratio
- Trading expense ratio
- Early redemption fee
- Switching fees
- Operating expenses
- Insurance premium
- Explain how a segregated fund assigns notional units to the contract holder.
- Explain the minimum regulatory duration and value guarantees for segregated fund holders.
- Death benefit
- Maturity benefit
- Explain how resets may affect the guarantees of a segregated fund.
- Explain how contributions / withdrawals may affect the guarantees of a segregated fund.
- Explain potential protections of a segregated fund, such as:
- Creditor protection
- Probate avoidance
- Explain the circumstances required for credit protection to be active for a segregated fund.
- Explain how income earned by a segregated fund is handled when distributed to unitholders of the segregated fund.
- For capital gains and losses
- Time-weighted
- Explain the impact of an allocation of income from a segregated fund on the net asset value per unit (NAVPU).
- Explain that the return of a segregated fund may be presented before the fund expenses have been deducted from the gross return of the fund.
- Define a guaranteed minimum withdrawal benefit plan.
- Identify that a guaranteed minimum withdrawal benefit plan allows for potential capital growth through participation in the market, while guaranteeing a minimum withdrawal each year.
- Identify that minimum and maximum ages exist to invest in a guaranteed minimum withdrawal plan.
- Identify that resets to the guaranteed withdrawal may occur every three years, based on growth in the plan.
- Identify that bonuses that increase the guaranteed withdrawal may be available for each year that a withdrawal does not occur.
- Identify that resets and bonuses may increase the guaranteed withdrawal amount, but do not add to the market value of the plan.
- Identify that guaranteed minimum withdrawal benefit plans may have death guarantees.
- Explain fees associated with guaranteed minimum withdrawal benefit plans, such as:
- Trading expenses
- Management expenses
- Administration expenses
- Insurance premiums
- Guarantee premiums
- Withdrawal fees
- Sales charges
Additional Knowledge Expected of CFP Professionals
- Interpret the return for a segregated fund.
- Explain the tax impact (based on asset location) of a segregated fund.
- When an allocation of income is added to the contract
- Upon disposition of the segregated fund
- Upon death of the annuitant
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