LLQP Practice Questions

(Miles receives a $500,000 inheritance. He wants to invest it in a high-risk segregated fund but is nervous about potential losses.

What unique advantage of segregated funds enables Miles to pursue this strategy?)

Enzo meets with his insurance agent Theo to discuss his investment needs. When Theo asks Enzo about his liabilities, Enzo tells him that he purchased a house for $750,000 four years ago and his current mortgage balance is $600,000. He has a fixed interest rate on the mortgage of 3.5% for 5 years.

Which of the following statements about his mortgage is TRUE?

Leonard and Ashley, a couple in their early 30s, meet with Howard, an insurance agent, to review their investment needs. Leonard earns $60,000 a year as a research physicist, and Ashley earns $25,000 as an actress. They each have $3,000 in their respective chequing accounts. Leonard also has $40,000 invested in his group registered retirement savings plan (RRSP). Ashley has a Subaru WRX worth $20,000 with a car loan of $10,000. Leonard does not own a car, but he has an outstanding student loan of $30,000.

What is the couple's net worth?

Remi owns a registered annuity contract that pays him a $2,500 monthly benefit. He purchased the contract five years ago from money he accumulated in his registered pension plan. At the time, he named his wife Annette as the revocable beneficiary of the contract. Today, he calls Louisa, his insurance agent, to designate his sister as beneficiary of the contract instead. Louisa tells him that there are restrictions on the contract and that he cannot change the beneficiary designation.

Why is Remi unable to make the change?

Janice, age 73, plans on purchasing a joint-and-last-to-die annuity. She wants to receive the highest possible annuity payments.

Who should be the joint annuitant?

(Helmut, a Canadian resident for 10 years, invests $25,000 in a segregated fund within an RRSP. The agent processes the transaction without asking for proof of identity.

According to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), what is the conclusion about the agent’s action?)

Candace, an insurance agent, met with her client Rebecca on March 15th to complete a life insurance application form. Rebecca applied for a T-10 $200,000 life insurance policy, she told Candace that she will wait for her policy to be accepted before making a premium payment. On April 10th, the application was accepted by the insurance company and Candace promptly called Rebecca to give her the good news. Candace delivered the policy to Rebecca on April 15th during the meeting, Rebecca gave Candace a cheque to cover her first premium and a void cheque to cover subsequent premium payments. Candace submitted the cheques to her manager on April 21st. When did Rebecca’s policy come into force?

Callum is an agent with Neverland Insurance. It was recently discovered that he had been using a tied selling technique to double his sales with each client. Which one of the following organizations will take action against Callum’s conduct?

Edward and Shirley initiated a whole life insurance application for their daughter Christine when she was 15 years of age. As Christine was a student with limited income at the time, the agent set Edward and Shirley jointly as owning and paying the premiums of this policy. Edward was designated beneficiary. Who is the policyholder?

Sergei meets with his insurance agent Nikita to purchase a $50,000 critical illness policy. Nikita explains that to apply for the policy Sergei would have to answer a series of personal questions about his finances, health, and lifestyle. Sergei is uncomfortable giving Nikita such detailed personal information. Nikita reassures Sergei by telling him that the insurer must follow stringent rules about how they can collect and handle this information. Which organization legislates privacy statutes pertaining to insurance companies?