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Sef Funds + Annuities 2024 > PPTS > Flashcards

PPTS Flashcards

1
Q

Time horizon

A

When does client need the money

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2
Q

Risk tolerance

A
  • the emotion
  • ability to withstand the emotion of a loss
  • based on psychological factors
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3
Q

Risk capacity

A
  • the financial
  • Ability to overcome the financial loss
  • based on financial factors
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4
Q

Personal risks

A
  • longevity: cant conrrol how long we live
  • leveraging: borrowing to invest
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5
Q

RRSP facts

A
  • reduces taxable income in year of contribution
  • contribution limit: 18%
  • trfs dont impact contribution limit
  • unused room can carey fwd
  • growth is tax deferred (tax on withdrawals )
    Max age: dec 31st of 71st year
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6
Q

RRSP contribution room formula:

A

Step 1: personal contribution limit cirrent yr : prev yr income X 18%

Step 2: deduct pension adjustment if any from prev yr (group RRSP/pension)

Step 3: unused room + current year contribution limit

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7
Q

Spousal RRSP

A
  • can put some income is spouse RRSP to lessen tax birden in retirement
  • RRSP belongs to spouse
  • contributor gets tax deduction
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8
Q

RRSP @ maturity (R.A.W)

A

@ 71 must use an option to trf RRSP to R.A.W:
- RRIF
- Annuity
- Withdrawal (full withdrawal)

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9
Q

Registered Retirement Income Fund (RRIF)

A
  • min amt must ne withdrawn every year (4%)
  • withdrawals based on u and spouse age and increases w age
  • if withdrawn above min = withholding tax
  • all withdrawals = taxable income
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10
Q

Group retirement plans: Pension plans

A
  • DBPP: Defined benefit pension plan
  • DCPP: Defined Contribution pension plan
  • PRPP: Pooled Registered pension plan
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11
Q

Group retirement Plans: retirement plans– need to update w more details

A

Transfer:
- LIRA
- locked in RRSP
- deferred life annuity

At retirement:
LIF
LRIF
RLIF
PRRIF

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12
Q

Group retirement plans: savings plans

A

DPSP: Deferred profit sharing plans

GRRSP Group Registered Retirement Savings Plans

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13
Q

Defined benefit pension plan

A

Missed notes

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14
Q

Defined contribution Pension Plan (DCPP)

A
  • employer and employee contribution known as
  • end benefit: not known
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15
Q

Pooled registered pension plan (PRPP)

A
  • employer not required to pay
  • not a specific employer –> 3rd party
  • enrollment automatic
  • deduction from pay
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16
Q

Deferred Profit sharing plans (DPSP)

A
  • only employer can add
  • comes feom company profits
  • contributions reduce RESP (pension adj)
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17
Q

Group Registered Retirement savibgs plans (GRRSP)

A

Similar to RRSP but for group

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18
Q

Investment options in order of least risk

A
  • savings account
  • GICs
  • bonds
  • stocks
  • real estste

Then:
Mutual funds
Seg funds and annuities

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19
Q

How does money grow?: time calue of money

A

FV= PV X (1 + interest rate) n

Calculator:
PV X %
Then press = for the amount of n
ORRR
PV + % + %+% etc… to the number of n

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20
Q

Segregated Funds
Card not finished

A
  • death benefit guarantee 75%
  • maturity guarantee 75%
  • reset option
21
Q

MER: management expense ratio
Card not finished

A
  • used to pay the cost of operating the investment
  • deducted from assets of fund
  • covers operating expenses, management fees, etc…
22
Q

Seg fund reset formula

A

New contract guarantee amount =
New market value X 75%

And can withdraw in #? Years?

23
Q

Sales charge: commision (3 types)

A
  • no load
  • front load
  • deferred sales charge/back end
24
Q

Sales charge: commission: no load

A

???

25
Q

Sales charge: commission: front end load

A

Charge commission up front

26
Q

Sales charge: commission: deferred sales charge/ back end

A

Only charged if client withdraws money within 1st 7 yrs

27
Q

Segregated funds real return:

A

Return % + MER%

28
Q

What is an annuity

A
  • Type of investment
  • 2 types: accumulation(IN) or Payout(out)
  • guaranteed income (i.e for retirement) , spousal/child support pmts
  • duration: Term or Life or impaired
29
Q

Impaired annuity

A

Ppl w shortened life expectancy due to health.

30
Q

Annuities: factors affecting payments
NOT DONE!!!

A
31
Q

Annuity income

A
  • level
  • variable
    -indexed
32
Q

Annuity income: leveled

A

Payment stays same

33
Q

Annuity income: variable

A

Annuity paymets linked to the performance of the investment

34
Q

Annuity income: indexed

A

Tied to inflation

Increases w inflation up to a max (determined by CPI)

35
Q

Annuity limitations

A
  • penalties to surrender/withdraw
  • withdraw: taking a portik
  • surrender: cancelling policy all together
36
Q

Seg funds and annuities : creditor protection

A
  1. Protected class (parent, spouse, child/grandchild
  2. Irrevocable beneficiaries
37
Q

Recommendign an investment: seg fund vs Ann.

A

Seg fund: wants investment w benefits of insurance contract , NOT seeking income

Annuity: seeking income

38
Q

Seg funds and ann: associates risks

A

Seg funds: types of investments im the gund

Annuity risks: interest rate risk + inflation risk

39
Q

Seg fund right of recission (to change mind)

A

2 biz days to get full refund

40
Q

Seg fund and ann taxation

A

Sev fund withdrawals:

41
Q

RRIF VS LRIF

A

RRIF- Registered Retirement Income Fund
- has min wothdrawal amt

LRIF- Locked-in Registered Retirement Income Fund
- has min and max withdrawal amt
- max is to ensure $$ lasts

42
Q

Insured life annuity

A
  1. Buy permanent life insurance ins
  2. Buy immediate life annuity where income pmt equal/more rhan premium on insurance policy
43
Q

How to bypass probate

A

Any product/account that allows investor to name a beneficiary can potentially avoid probate fees
I.e: life insurance, seg funds, RRSP

44
Q

What valuation date used to deteemine seg fund redemtiom value?

A

Seg funds always based on NAVPU at NEXT VALUATION DATE

45
Q

Insured Life Annuity (2 steps)

A
  1. buy PERMANENT lofe insurance 1ST
  2. Buy immediate annuity where the income payments equal/more than premium on life insurance policy
46
Q

CPP entitlement formula (2 formulas)?

A

CPP % increase formula:
(%0.70 inc ) X # months of delay= ?? MAX 8.4%/yr, 42% over 5 yrs

CPP benefit $ entitlement increase:
(Monthly entitlement @65) X (100% + % Inc calculated above)

47
Q

CPP entitlement INCREASE - if delay till 70

A
  • CPP permanently INCREASED by 0.70% ea month DELAYED (after age 65)
  • max increase 8.4%/yr , 42% over 5 years
48
Q

CPP entitlement reductions- take early (before 70)

A
  • permanently reduced by 0.60% ea month taken early (before age 70)
  • Max reduction = 7.2%/ yr , 36% max over 5 yrs

Sef Funds + Annuities 2024 (2 decks)

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