Mrs. Desjardins, 70, holds a non-registered segregated fund contract in Quebec. The market value is $250,000, her deposits were $200,000, and she executed a reset two years ago when the fund's market value reached $280,000. The contract has a 75/75 guarantee. No withdrawals have been made. What is her current maturity guarantee, and how does the reset impact it?

Question: Mrs. Desjardins, 70, holds a non-registered segregated fund contract in Quebec. The market value is $250,000, her deposits were $200,000, and she executed a reset two years ago when the fund's market value reached $280,000. The contract has a 75/75 guarantee. No withdrawals have been made. What is her current maturity guarantee, and how does the reset impact it?

Answer options: ✅ "The maturity guarantee is $210,000 (75% of the $280,000 reset value), as the reset established a new guaranteed amount based on the higher market value at the time of the reset."

• "The maturity guarantee remains $150,000 (75% of original deposits), because resets only affect the death benefit not the maturity guarantee."
• "The maturity guarantee is now $250,000, as the current market value always supersedes any previous guarantees, including resets."
• "The maturity guarantee is $200,000 (the original deposits), because the fund is still active and has not yet reached its maturity date."

Correct answer: "The maturity guarantee is $210,000 (75% of the $280,000 reset value), as the reset established a new guaranteed amount based on the higher market value at the time of the reset."

Explanation: A reset feature allows the contract holder to lock in a new, higher guaranteed value for both maturity and death benefits, based on the market value at the time of the reset. In this case, 75% of the $280,000 market value at the time of the reset ($210,000) becomes the new maturity guarantee, as it supersedes the lower original guarantee of 75% of $200,000 ($150,000).