1.

Lorenzo, an insurance agent, meets with a new client, Francis, to discuss life insurance options. Francis is looking to purchase a policy that will provide $1MM on his life. During their meeting, Lorenzo learns that Francis has been an accountant for over 25 years and is the bookkeeper for the second largest foundation for diabetes in Ontario.  After further discussion, Lorenzo provides his recommendation on the insurance policy for Francis.  Francis mentions he will need to review the policy with his wife and will let Lorenzo know his final decision.  Before leaving, Francis asks Lorenzo to contribute towards the foundation he works for.  What should Lorenzo do?

2.

What does it mean to “partially surrender” a policy?

3.

Jill and Patricia are co-owners of a wellness centre providing services such as chiropractic, physiotherapy, massage therapy and acupuncture.  As co-shareholders, they have a buy/sell agreement with many provisions.  One of the provisions, entails that if either one of them were to become injured or ill and is unable to work for a prolonged period, there will be a buyout at the fair market value of the injured/ill co-shareholder’s interest.  Jill and Patricia agreed that the prolonged period would be equal to or greater than one year.  To fund this provision of the agreement, they decide to utilize corporate-owned disability insurance.  Which of the following provisions of disability insurance policies would be ideal for the terms of the buy/sell agreement?

4.

Verinder is 64-years-old and is hoping to qualify for the Guaranteed Income Supplement (GIS). He has no RRSP, TFSA or non-registered investments. His income last year was only $30,000, but he has no debts. Last month, his father died and Verinder inherited $60,000. What would you recommend Verinder do with the inheritance to ensure that he will still qualify for GIS?

5.

Jim, a Canadian investor is looking to protect his portfolio from inflation and trying to decide on which product to add. Based on the below, which of the following products would help protect the portfolio from the risk of inflation?

6.

Tim purchased life insurance from LifeSecure through his agent Kevin. The application was approved, and five days later, Kevin delivered the insurance policy.  The insurance policy was taken out on his wife Abbie’s life. Tim is designated as the primary beneficiary, and their daughter Mari is the contingent beneficiary. Both designations are revocable. During the application process, Tim claimed that Abbie had no history of cancer. However, three years later, she was diagnosed with breast cancer, which she survived.   What does the revocable nature of the beneficiary designation mean?

7. Vincent, age 55, has been working as a project manager at an engineering firm for over 25 years.  He plans to retire in the next 5 years.  His annual income is $115,000 and he has expenses of $50,000 per year.   He lives alone and has no children.  Performing some calculations on his end, Vincent expects that he would be able to reduce his expenses by 30% in retirement.  If inflation is projected at 2% between now and his retirement, what will Vincent’s annual expenses be in his first year of retirement?

8.

Jim, age 42, has been working for the last 5 years at WoodCan, a large woodworking company.  His annual salary is $60,000 and has not changed since he started working with WoodCan. The company provides long-term disability benefits at 55% of his regular salary.  WoodCan’s plan includes a 75% all-sources maximum benefit.  Jim also has a personal disability policy that pays a 50% benefit.  If Jim were to become disabled, what monthly benefit amount is he entitled to from his personal plan?

9.

Pedram is a member of a group disability insurance (DI) plan where the employer and the employee share the premium cost for all group benefits on a 50/50 basis. Up until now, Pedram has never made a claim against the long-term disability (LTD) benefits available under the plan. However, this year he was injured and ended up receiving a total of $17,000 in group LTD benefits. To date, Pedram and his employer had shared the $8,200 in total premiums paid on his behalf for the LTD coverage. Of the $17,000 Pedram received, how much would be treated as taxable income?

10.

Rita, an insurance agent working in Ottawa, is delivering a $500,000 joint universal life policy to her clients Michael and Michelle.  Rita explains to her clients that insurance policies take on many different forms but all have basic provisions, as required by Ontario’s insurance acts, summarized on a single page. As Rita explains the insurance policy contract and its provisions, which insurance policy details from the summary page is she able to go over with Michael and Michelle?

1. Grace period for premium payments

2. Terms of any insurance policy loan provisions

3. Conditions of reinstatement provisions

4. Policy options (if any)

11.

Raj, age 40, is buying a house. He works as an instrumentation technician full-time for the last 10 years. Raj would like to purchase insurance to cover the risk that he will be unable to meet his mortgage and other debt obligations should he lose his income. He is considering either creditor insurance offered by his lending institution or individual insurance purchased from an insurance company. His insurance agent suggests that individual insurance has advantages over creditor insurance. For one thing, Raj can choose to customize it by adding riders and supplementary benefits. In addition, individual insurance can provide benefits for different levels of disability, whereas creditor insurance might only apply in the case of total disability.  Why might Raj choose to customize his policy with a residual disability benefit?

12.

Jim, age 47, works for RoofCo for over 10 years.  Last year, he fell off a roof and injured his right leg.   Jim needed anterior cruciate ligament (ACL) reconstructed surgery.  Post-surgery, the surgeon explains to Jim that he will need over six months of rehabilitation in order to make a full recovery.  Prior to his physiotherapy treatment, he meets with an insurance agent to purchase a disability policy with a monthly benefit of $3,000 and an elimination period of 30 days.  After the agent submits to the insurer, the insurer asks Jim for additional information in order to satisfy his claim.  Which of the following below must the agent ask him to submit to the insurer in order to satisfy their requirements and process his disability claim?

1. A copy of his current pay slip

2. A letter from his employer stating that he cannot perform his duties

3. An Attending Physician’s Statement from the surgeon

4. An Attending Physician’s Statement from the physiotherapist

5. His last T4

6. Proof of expenses

13.

Michael, age 32, is currently earning $75,000 per year working as an data analyst for a large telecommunications company. He is married to his wife Christine, age 32, and they have a 2-year-old daughter.  If he were to die, Michael wants to ensure his family can maintain this level of income until his wife turns 60. Assuming a 3.25% interest rate and payment is received by her at the beginning of each year. What is the level of insurance coverage that would be needed to pay his wife an income of $75,000 per year?

14.

Josephine deposits $10,000 to her segregated fund contract that has a deferred sales charge (DSC). Two years later, she needs some of the money and withdraws $5,000. What will her DSC be for the transaction based on following DSC schedule?

• • • Less than 1 year – 5%
    • At least 1 year but less than 2 years – 4.5%
    • At least 2 years but less than 3 years – 4%
    • At least 3 years but less than 4 years – 3.5%
    • 4 years or longer – 0%

15.

Manish, age 36, is married to Mona, age 35. They have 3 children in elementary school. Their combined household income is $85,000. They own a small bungalow with a $50,000 mortgage. Manish and Mona want to purchase life insurance to protect their family unit. They are planning to start a business in the next 10 years and don’t want to pay any life insurance premiums once the business is started. However, they want insurance coverage for the rest of their lives. Which type of policy would be most suitable in their situation?

16.

Teresa, age 54, was diagnosed with coronary artery disease two weeks ago. Her scheduled surgery is in five days and Teresa has critical illness insurance coverage. Which of the following regarding critical illness policy coverage does Teresa need to be made aware of?

1.  Lump sum benefit is paid multiple times to Teresa as long as she was diagnosed with a different critical illness

2.  Lump sum benefit is paid if Teresa is still alive after 30 days of her diagnosis

3.  Lump sum does not need to be paid back if Teresa survives

4.  Lump sum benefit can be used for only purchasing the best medical treatment

17.

Brenda, age 29, is a high-school teacher living in Regina, Saskatchewan.  During her summers off, she enjoys travelling for several months with her other single friends to either South America, Europe or Asia.  She makes $75,000 as a full-time teacher and saves her money throughout the winter months.  Ten years ago, her father advised her to get a whole life insurance policy with a large cash surrender value. Which of the following options below would Brenda use the cash surrender value from her policy?

18.

Riaz has loaned his brother Akash $250,000 to buy a house. Akash promises to pay back the money within 10 years. Riaz asks Akash to buy a life insurance policy with Riaz as the beneficiary. What type of insurance policy would be most cost effective for this situation.

19.

David purchased a cottage 20 years ago for $50,000 and it is now worth $200,000. He wants to leave the cottage to his son on his death, but is concerned with the tax liability. Which of the following strategies would be most suitable to lower his tax liability?

1.   permanent life insurance

2.   term-to-65 life insurance

3.   register his son as a joint tenant on the property

4.   term-to-100 life insurance

20.

Sadiq meets with his high school friend, Paul, who he has not seen for over 20 years.  Paul, a life insurance agent works at InsuraMe.  Sadiq mentioned to Paul that he currently owns a universal life insurance policy.  Based on Sadiq current situation, Paul suggest he replace his UL policy with a whole life insurance policy.  Paul explains to Sadiq he will need to fill out a Life Insurance Replacement Declaration, which will help him receive full disclosure of all relevant details required to make an informed decision. What is true regarding this document?