Ichbar, age 60, hopes to retire at age 65. As part of his retirement plan, five years ago he cashed out the bonds and short-term deposits held in his RRSP with a brokerage house and transferred the $260,000 proceeds to an Individual Variable Insurance Contract (IVIC) registered plan with a life insurance company. He invested the funds in a balanced fund with 75% guarantees. The funds have since grown in value to be worth $350,000 and Ichbar wonders if he should exercise the reset option. Would you recommend that Ichbar exercise the reset option and why or why not? 

A) No, because the guarantee would only be marginally higher than his original deposit amount. 

B) Yes, because the reset guarantee would be greater than his original deposit amount.

 C) No, because he will need the funds to supplement his retirement in five years. 

D) Yes, because Ichbar could die in the intervening five years

Answer rating: 100% (QA)

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