Maria, a 68-year-old retiree in Alberta, holds an Indexed Segregated Fund contract with a Deposit Date guarantee of 75% at maturity and 75% at death. The market value of her fund is currently $200,000, and her deposits totaled $150,000. She initiated a reset feature 5 years ago when the market value was $180,000. If Maria were to pass away today, what would be the minimum death benefit payable from this segregated fund contract, assuming no withdrawals have occurred since the last reset?

Question: Maria, a 68-year-old retiree in Alberta, holds an Indexed Segregated Fund contract with a Deposit Date guarantee of 75% at maturity and 75% at death. The market value of her fund is currently $200,000, and her deposits totaled $150,000. She initiated a reset feature 5 years ago when the market value was $180,000. If Maria were to pass away today, what would be the minimum death benefit payable from this segregated fund contract, assuming no withdrawals have occurred since the last reset?

Answer options: ✅ "$180,000"

• "$200,000"
• "$150,000"
• "$135,000"

Correct answer: "$180,000"

Explanation: Segregated fund death benefits are the greater of the market value or the guaranteed amount. With a reset, the death benefit guarantee effectively increases to the market value at the time of the reset, multiplied by the guarantee percentage if it's higher than the original deposit guarantee. Here, 75% of the reset value of $180,000 is $135,000, but the reset itself sets the new guaranteed amount to the market value at reset for future calculation, which is $180,000, as it's higher than her original deposits. The death benefit is the greater of the current market value ($200,000) or the reset death benefit guarantee ($180,000), which is $200,000. However, the question asks for the minimum death benefit, which would be the guaranteed amount set by the reset, if the market value falls below it. The reset locked in a new guarantee for death at $180,000. So, it's $180,000. This is a hard question due to the interplay of resets and guarantees.