An investor, Mr. Lim, purchases a segregated fund contract with an initial deposit of $50,000. The contract has a maturity guarantee of 75% of deposits and a death benefit guarantee of 100% of deposits. After three years, the market value reaches $65,000. Mr. Lim decides to reset his death benefit guarantee. If the contract allows for a 100% death benefit guarantee reset at market value, what will be the new guaranteed death benefit amount?

Question: An investor, Mr. Lim, purchases a segregated fund contract with an initial deposit of $50,000. The contract has a maturity guarantee of 75% of deposits and a death benefit guarantee of 100% of deposits. After three years, the market value reaches $65,000. Mr. Lim decides to reset his death benefit guarantee. If the contract allows for a 100% death benefit guarantee reset at market value, what will be the new guaranteed death benefit amount?

Answer options:

• $50,000 ✅ $65,000
• $48,750
• $52,000

Correct answer: $65,000

Explanation: A death benefit guarantee reset at market value means that the current market value becomes the new guaranteed amount for the death benefit, overriding the original deposit guarantee. Therefore, the new guaranteed death benefit would be $65,000.