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LLQP Life License Qualification Program (LLQP) Questions and Answers

Questions 4

Ming-Na is a McGill University graduate interested in pursuing a career as an insurance of persons representative. She wants to know which piece of legislation sets out the definition and role of insurance of persons representatives.

Which of the options below is CORRECT?

Options:

A.

The Insurers Act.

B.

The Distribution Act.

C.

The Act respecting insurance.

D.

The Act respecting prescription drug insurance.

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Questions 5

Kalei owns a $250,000 life insurance policy with an accumulated cash surrender value of $75,000. She meets with her insurance agent Pamela to inform her that she quit her job last week. She wants to start an online business and needs $40,000 to fund the inventory and cover her living expenses for a few months. She heard that it was possible to obtain a loan using her policy at a 5% interest rate. Which of the following statements about collateral assignment is CORRECT?

Options:

A.

Upon Kalei's death, the insurance company will only reimburse the bank the entire $40,000 that she borrowed.

B.

Kalei is prohibited from doing anything with her policy that could affect the value of the security.

C.

Kalei must name the bank as an irrevocable beneficiary of the policy until the debt is paid off.

D.

The bank is the new policyholder and beneficiary of the policy.

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Questions 6

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?

Options:

A.

He is already receiving payments from the contract.

B.

He would first have to obtain his wife's consent to change it.

C.

He did not complete the change of beneficiary form.

D.

The contract was funded by a registered pension plan.

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Questions 7

Melissa owns a disability insurance policy from Clarity Life. She makes her premium payment on the second day of each month, but this month, she misses the payment deadline. A week passes before she realizes her oversight. She makes a frantic call to Jonathan, a Clarity Life customer service representative. Jonathan explains about notices of termination. Which of the following responses is CORRECT?

Options:

A.

Melissa's policy was cancelled 24 hours after she missed her payment, and Clarity mailed her a notice of termination.

B.

Melissa's policy would only be cancelled 30 days after the due date of her missed premium payment.

C.

Melissa's policy has a grace period and would not be cancelled until 10 days after Clarity Life mails her a notice of termination.

D.

Melissa's policy has a grace period and would not be cancelled until 15 days after Clarity Life mails her a notice of termination.

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Questions 8

Emeka, a new insurance agent with Sunrise Insurance, meets with her client, Mosi. After analyzing Mosi's needs, Emeka determines that Mosi's current life insurance coverage with Starlight Insurance is more than sufficient. Nevertheless, she persuades Mosi to cancel his existing coverage and buy a new life insurance policy with Sunrise Insurance. She believes this is a good compromise because Mosi will have the coverage he needs, and the new transaction will pay her a commission. Which of the following offences did Emeka commit?

Options:

A.

Inducing to insure.

B.

Twisting.

C.

Churning.

D.

Fronting.

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Questions 9

Rowan works for a construction company that employs 40 employees. The company is newly established, and the owners have yet to implement a group insurance policy. Rowan falls off the side of a building and breaks his collar bone. The doctor informs him that he will be unable to work for five months.

Who will pay him disability benefits while he is recuperating?

Options:

A.

His employer.

B.

Employment Insurance.

C.

Canada Pension Plan.

D.

Workers' Compensation.

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Questions 10

Samir applied for a life insurance policy 18 months ago. At the time of the application, he was employed as an accountant. Samir quit his accounting job 6 months ago to become a professional scuba diver.

Which of the following statements about Samir’s life insurance policy is CORRECT?

Options:

A.

Samir must inform his insurer about his change of occupation within 6 months of the change.

B.

Samir is not required to declare his change in occupation because the policy is less than 2 years old.

C.

Regardless of whether Samir informs his insurer of his change in occupation, if he dies while scuba diving, he would not be covered.

D.

Samir has no obligation to notify the insurer of his change of occupation regardless of how old the policy is.

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Questions 11

Aari and Jonila are a married couple in their late sixties. They both enjoy a comfortable retirement. Both receive regular payments from their pension plans, Old Age Security (OAS) and Canada Pension Plan (CPP). They own a house and a cottage that are both mortgage-free. They also have over $500,000 in savings and investments. They know that if one of them dies, the surviving spouse will be financially comfortable. The couple has two grown children to whom they would like to leave all their assets when they die. The couple informs Herbert, their insurance agent, that they want to make sure when they die that their children have the funds needed to pay the taxes on the assets that they will bequeath them.

Which life insurance policy would be most suited to meet the couple's needs?

Options:

A.

A permanent joint last-to-die policy on Aari and Jonila.

B.

A permanent joint first-to-die policy on Aari and Jonila.

C.

A term joint last-to-die policy on Aari and Jonila.

D.

A term joint first-to-die policy on Aari and Jonila.

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Questions 12

Nathalie worked for 25 years as an administrative assistant at a manufacturing company. When she left the company 10 years ago, she transferred the money that she accumulated from the company’s pension plan into a locked-in retirement account (LIRA). Now she is 60 years of age and would like to withdraw the money from the LIRA.

Under which of the following circumstances would Nathalie be allowed to withdraw her funds?

Options:

A.

She moved to Arizona last year.

B.

She is disabled and her life expectancy is reduced.

C.

She is retiring.

D.

She will start collecting QPP benefits.

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Questions 13

Andre, an insurance agent, meets with his client Jasper to discuss his $150,000 whole life insurance policy. Jasper is deeply indebted and needs at least $40,000 to cover his debt. Andre tells him about a company he knows that will be willing to give him $75,000 if he assigns his policy to them. Did Andre act appropriately?

Options:

A.

No, because Jasper is not allowed to assign his policy to an arms-length entity.

B.

No, because trafficking in insurance is discouraged by the insurance industry.

C.

Yes, because he is helping his client pay off his debt.

D.

Yes, as long as this practice is not illegal in his province of residence.

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Questions 14

Naomie meets with her new client, Keisha, to review her investment portfolio. Keisha is a 43-year-old sales representative who has been with Belmont Inc., a large pharmaceutical company, for 15 years. She earns a generous salary, plus bonuses. She also has a group tax-free savings account (TFSA) and a defined contribution pension plan (DCPP), all of which are invested in Belmont common shares.

What main need does Naomie have to address regarding Keisha’s investments?

Options:

A.

Liquidity.

B.

Saving for an emergency fund.

C.

Diversification.

D.

Income.

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Questions 15

Josh is a successful insurance agent with Smart Insurance Inc. who mentors new agents and gives them tips on how to increase their client base. He tells Clarence, a new agent, that he should send an email to close friends and family members to explain the services that he now offers. Clarence is worried about sending unsolicited promotional emails because Firash, the compliance manager, had told him that the practice is not allowed. What legislation was Firash correctly referencing?

Options:

A.

The Personal Information Protection and Electronic Documents Act (PIPEDA).

B.

The Privacy Act.

C.

Canada’s Anti-Spam Legislation (CASL).

D.

The Criminal Code.

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Questions 16

Johann owns a $250,000 whole life insurance policy. The policy has a cash surrender value (CSV) of $55,000 and an adjusted cost basis (ACB) of $30,000. Johann would like to cancel his policy and use the cash surrender value to fund a new business. If his marginal tax rate is 40%, how much will he have left after cancelling his policy?

Options:

A.

$30,000

B.

$33,000

C.

$45,000

D.

$55,000

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Questions 17

Seven years ago, Amber invested $150,000 in a non-registered equity segregated fund. Her investment grew, and today, the market value of her fund is $165,000. She places an order to redeem her fund and she wants to know how her investment will be taxed.

Options:

A.

The $15,000 of capital gains will receive preferential tax treatment.

B.

The $15,000 of capital gains will be 100% taxable.

C.

The entire $165,000 will be taxed as income.

D.

The investment will not be taxed.

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Questions 18

Jonas recently graduated with his engineering degree and is joining the Alberta Engineering Association. He is informed that the association offers a group plan to all members. Jonas wants to join the plan but wishes to know who will pay the premiums for the coverage.

Which of the following answers is CORRECT?

Options:

A.

The members must pay 100% of the premiums.

B.

The Association will pay 100% of the premiums.

C.

The premiums are split between the members and the association.

D.

Initially, the members must pay 100% of the premiums but after 3 years in the plan, the premiums are split with the association.

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Questions 19

Li Jun, 50, applies for a $250,000 critical illness (CI) insurance policy with his insurance agent Ming. On the application, Li Jun states that he must take pills daily to manage his hypertension. Aside from this, his health is good. Given his age and hypertension issue, he is worried that the insurer may refuse his application.

What does Ming CORRECTLY advise him?

Options:

A.

The policy will likely be denied.

B.

The policy will likely be issued with an exclusion.

C.

The policy will likely be issued with a premium rating.

D.

The policy will likely be issued with a lower benefit.

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Questions 20

Zaid married Baheya five years ago in Montreal. A year later, Zaid purchased two individual term-life insurance policies, one on his life and the second on Baheya’s life, each with a death benefit of $250,000. The marriage didn't last long and the couple divorced shortly thereafter. Baheya went on to marry Omar, and the new couple had a baby together, named Darwish.

Last week, Baheya died in a car accident. While settling her estate, Omar discovered that no beneficiary was designated on Baheya’s life insurance policy.

To whom will Baheya’s death benefit be paid?

Options:

A.

Zaid

B.

Omar

C.

Darwish

D.

Baheya’s succession

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Questions 21

Trisha is new to the insurance industry and wants to understand the primary responsibility of the Canadian Insurance Services Regulatory Organizations (CISRO). Which of the followingstatements about CISRO is CORRECT?

Options:

A.

To administer the regulatory system, applicable to insurance intermediaries.

B.

To administer the enforcement of the federal Personal Information Protection and Electronic Documents Act (PIPEDA).

C.

To help protect the integrity of the Canadian financial system.

D.

To provide clients with assistance to their enquiries and complaints pertaining to Canadian life and health insurance products and services.

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Questions 22

Maverick meets with Alyssa, an insurance agent, to review his life insurance needs. After completing the needs analysis, Alyssa suggests that Maverick purchase a $100,000 whole life insurance policy and add a critical illness (CI) benefit rider. Which of the following options is an advantage of adding the CI coverage as a rider instead of purchasing an individual CI policy?

Options:

A.

It covers more illnesses than an individual policy.

B.

Benefits are paid out as soon as the individual is diagnosed with a covered condition.

C.

It is less expensive than an individual policy.

D.

If he is diagnosed with a debilitating illness that does not endanger his life, he may still receive coverage.

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Questions 23

Maeve is an Ontario resident. Fifteen years ago, she purchased a $250,000 whole life insurance policy and named her husband Guillaume as the primary beneficiary and her 4-year-old son Edwin as the contingent beneficiary. Last week, Tasha, Maeve's insurance agent called her to ask if she has had any life changes that would warrant a meeting to review her insurance coverage. Maeve informs her that over the last year she divorced Guillaume and that she is now living with her new boyfriend Eduardo. Tasha asks to meet Maeve to review her beneficiary designation. Who will receive Maeve's death benefit if she dies today?

Options:

A.

Guillaume

B.

Edwin

C.

Eduardo

D.

Maeve’s estate

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Questions 24

Jasper is the sole breadwinner in his family. His wife Stephanie has chosen to dedicate all of her time to raising their 3 young children. Luckily, Jasper earns a monthly after-tax income of $25,000 working as a family doctor in the local clinic. Jasper meets with his insurance agent Odda to purchase a life insurance policy that will ensure his family will be able to continue to enjoy their current lifestyle in the event of his death. If his average tax rate is 40% and the investment return is 4%, how much life insurance should Jasper purchase based on the income replacement approach?

Options:

A.

$625,000

B.

$1,041,666

C.

$7,500,000

D.

$12,500,000

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Questions 25

Anita is a 50-year-old woman who is thinking of purchasing a $150,000 permanent life insurance policy to pay for the capital gains tax that will be payable on her country home upon her death. She had purchased the home twelve years ago and wants to bequeath the property to her niece when she dies.

Which of the following features about a permanent insurance policy is TRUE?

Options:

A.

The coverage ends when Anita turns 100.

B.

The premiums will remain level for the duration of the contract.

C.

The policy cannot be cancelled by Anita.

D.

Anita must contact the insurer if there is a change in the insurability.

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Questions 26

Six years ago, when Kacey was working as an active firefighter, she purchased a $200,000 30-year term life insurance policy. At the time, the insurance company rated her policy. Recently, she changed roles and now works for the fire department’s public relations office, answering media calls and filling out paperwork. She meets with her insurance agent, Bernice, to ask if the insurer would consider reducing her premiums.

Options:

A.

The premiums cannot be increased once the policy is issued.

B.

The insurer cannot reduce the premium, but Kacey can apply for a new policy at a lower premium.

C.

The premiums can be reduced only if the policy has been in force for more than two years.

D.

Her premiums can be reduced since she is no longer a firefighter.

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Questions 27

Emery is a healthy wife and mother of two who spends her days caring for her children and volunteering at the local food bank. Emery would like to purchase disability insurance coverage because she is worried about how she would be able to take care of her family if she becomes disabled.

What type of disability policy, if any, is likely to be issued to her?

Options:

A.

Guaranteed renewable policy.

B.

Cancellable policy.

C.

Non-traditional disability insurance.

D.

None. Emery is uninsurable.

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Questions 28

Kyra is the owner and president of Borealis Fit, a martial arts studio with 15 employees. The centre opened five years ago and has done well. Kyra was never able to offer her employees any benefits until now. Kyra meets with Monica, an insurance agent, to implement a group insurance plan for the employees.

Which method of calculating rates will the insurer use to quote the group premiums?

Options:

A.

Manual rating.

B.

Blended rating.

C.

Credibility rating.

D.

Experience rating.

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Questions 29

Arthur is a 79-year-old long-term care (LTC) policyholder whose daughter, Sheila, visits daily tohelp him get dressed and prepare meals. Sheila wants him to enter a nursing home because he is unable to dress himself. Though he cannot prepare his own meals, he can still feed himself, and once undressed, he can wash himself, seated in the bathtub.

Is Arthur eligible to receive LTC benefits?

Options:

A.

Yes, Arthur is eligible because he cannot dress himself or prepare his own meals.

B.

Yes, Arthur is eligible because he is unable to dress himself and he must sit in the bathtub to wash himself.

C.

No, Arthur is not eligible because even though he cannot prepare his own meals, he is able to feed himself.

D.

No, because except for dressing himself, Arthur can perform all the other activities of daily living.

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Questions 30

Vintage Style Inc. is a clothing company with 20 employees participating in its group retirement and group insurance plan. Premiums for the group insurance plan are calculated on previous claims. If the benefits paid are lower than anticipated, the premiums may decrease at renewal. However, if the benefits paid are higher than anticipated, the premiums payable may be subject to an increase.

Which of the following funding formulas does Vintage use in its group insurance plan?

Options:

A.

Non-refund accounting.

B.

Refund accounting.

C.

Administrative services only.

D.

Claims experience.

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Questions 31

Nikolai owns a guaranteed renewable individual disability policy that he purchased last year. The policy pays a monthly benefit of $3,000 and includes a 4-month waiting period and a 5-year benefit period. Today, he is diagnosed with prostate cancer and learns he must undergo 6 months of radiation.

When should he contact the insurance company to inform them of his diagnosis?

Options:

A.

As soon as he receives his diagnosis.

B.

Within 30 days of receiving his diagnosis.

C.

As soon as his waiting period is over.

D.

As soon as his treatment finishes.

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Questions 32

Bea is a married 65-year-old woman applying for a life insurance policy. She meets with Stanley, her insurance agent, to review her insurance needs. Stanley inquires if Bea has started receiving Old Age Security (OAS) and Canada Pension Plan (CPP) benefits. Why is it important for Stanley to know this?

Options:

A.

These funds are taxable and may increase her need for life insurance.

B.

Her life insurance needs may decrease if she is retired.

C.

Her spouse may be eligible for survivor benefits upon her death.

D.

To calculate her retirement income.

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Questions 33

Svetlana is a 45-year-old single mother with two children: Georgi 17; and Ingrid 13. The children's father, Vladimir, has a serious gambling problem and only visits them sporadically. Vladimir's younger brother Sergei, on the other hand, is a dependable and helpful uncle who helps Svetlana regularly with the children. Svetlana meets with Robert, an insurance agent to review her life insurance needs because she wants to make sure that her children are taken care of if she were to die prematurely. Robert suggests that she purchase a $200,000 policy. Who should she name as a beneficiary?

Options:

A.

Georgi and Ingrid but name Vladimir as a trustee.

B.

Georgi and Ingrid but name Sergei as a trustee.

C.

Sergei

D.

Vladimir

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Questions 34

Hana, a 25-year-old personal assistant, recently got a job where the employer offers all employees access to a defined contribution pension plan (DCPP). Hana meets with the group insurance agent, Tom, because she must choose her investments and she doesn't know what she should choose. She is not very knowledgeable about investments, but since the money will only be used at retirement, she wants to invest in a fund that combines stocks and bonds and that is easy to understand.

Which fund should Tom suggest?

Options:

A.

Balanced Fund

B.

Bond Fund

C.

Dividend Fund

D.

Target date Fund

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Questions 35

Dakota is the owner of Fresh Drapes, a home decoration company. She opened her business five years ago when she quit her day job, took out loans, and put all her life savings into opening herstore. Her business is doing well, so she meets with Tanya, an insurance agent, to start investing for her retirement. After completing a thorough needs analysis, Tanya suggests that Dakota purchase segregated funds and name her husband as the beneficiary of the funds.

Which of the following offers the GREATEST benefit to Dakota by investing in segregated funds over other types of investments?

Options:

A.

Diversification

B.

Maturity and death benefit guarantees of 100%

C.

Professional management

D.

Creditor protection

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Questions 36

Kadiha invested $10,000 in a balanced fund 10 years ago, which she put into a non-registered account. At the time, her insurance agent sold her the fund with a 75% maturity and death benefit guarantee. Today, when the fund expires, the market value is $5,000.

How much will Kadiha receive, and how will her funds be treated for tax purposes?

Options:

A.

$7,500, tax free.

B.

$7,500, of which $2,500 will be taxed as capital gain.

C.

$7,500, of which $2,500 will be taxed as interest income.

D.

$7,500, of which $2,500 will be taxed as interest, dividend, and capital gain.

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Questions 37

Kimeni meets with Orion, an insurance agent, to purchase segregated funds. After assessing Kimeni's needs, Orion suggests an index segregated fund. Kimeni agrees to invest $5,000 in the fund now and $200 every month.

With relation to this transaction, which of the following options is CORRECT about the Fund Facts document?

Options:

A.

Orion must deliver the document to Kimeni within 3 days after the purchase.

B.

Kimeni must acknowledge that he received the document.

C.

Orion can only deliver the document to Kimeni electronically.

D.

It is Kimeni’s responsibility to ask for the document.

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Questions 38

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?

Options:

A.

A mortgage is considered a bad debt.

B.

An increase in interest rates will increase the mortgage cost when the mortgage is renewed.

C.

The mortgage will contribute positively to Enzo's net worth.

D.

The mortgage balance should not be included in the review of liabilities.

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Questions 39

Xavier meets and fills out an application form with Jose, an insurance representative, because he would like to purchase a critical illness insurance policy. When Jose asks Xavier about his alcohol consumption, Xavier admits he regularly drinks 10 beers a day.

What is the next step in the application process?

Options:

A.

The insurance company will automatically refuse the application.

B.

The insurance company will accept the application with an exclusion for alcohol consumption.

C.

Jose should refuse the request.

D.

Xavier will have to fill out a questionnaire detailing his alcohol consumption.

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Questions 40

Kirill purchases a $250,000 permanent life insurance policy on the life of his grandson, Dmitry. Kirill asks his wife Katya to pay the policy premiums and names his daughter, Natalya, as the subrogated policyholder. He does not name a beneficiary. Subsequently, Kirill dies without a will.

Who will become the new policyholder?

Options:

A.

The executor of Kirill's estate.

B.

Katya.

C.

Natalya.

D.

Dmitry.

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Questions 41

Gino, an insurance of persons representative, is cleaning his office and going through old files. He comes across a file from a former client, Nathan, who owned a 20-year term insurance policy that was cancelled 3 years ago. Nathan now has a different representative and Gino no longer has any contact with him. Gino would like to know if he can destroy Nathan's file.

Which of the following options is CORRECT?

Options:

A.

Yes, because Nathan transferred his affairs to another representative.

B.

Yes, because Nathan cancelled his policy 3 years ago.

C.

No, because he must wait until the file has been closed for at least 5 years.

D.

No, because he must wait until the file has been closed for at least 7 years.

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Questions 42

Isaac and Natasha, Quebec residents, were married 18 years ago. At the time, they visited a notary to get married under the "separation as to property" matrimonial regime and had indicated their wish to waive the application of the division of the patrimony by agreement. After experiencing a series of personal crises, the couple is now divorcing.

Which of the following assets, if any, will they have to separate when they divorce?

Options:

A.

Isaac's dental practice, started 10 years ago.

B.

Natasha’s cottage, purchased with Isaac 15 years ago.

C.

The $40,000 accumulated in Isaac’s whole life insurance policy.

D.

They will not need to separate any assets.

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Questions 43

Coraline is a landscape gardener who owns a disability insurance (DI) policy. The policy will pay her a $3,000 monthly benefit after a 90-day waiting period. She is diagnosed with cancer, and because she has to undergo months of chemotherapy, she will be unable to work. She calls Robin, her insurance agent, to inform him of her diagnosis. She would like to know more information about the claims process.

Which of the following statements is CORRECT?

Options:

A.

Coraline must contact her agent by phone within 30 days of learning about her diagnosis.

B.

Coraline has 30 days to provide the insurer with all of the information required to process the claim.

C.

The insurer must pay Coraline the benefit amount within 30 days after receipt of the proof of loss.

D.

The payment of the initial benefit to Coraline must occur within 30 days after the end of the waiting period.

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Questions 44

Danny purchases a $1,000,000 whole life insurance policy. He names his three daughters, Donna-Joe, Stephanie, and Michelle, as revocable beneficiaries with each receiving one-third of the death benefit.

If Michelle predeceases Danny, and Danny did not have a chance to modify his beneficiary designation, how will Danny’s death benefit be paid out?

Options:

A.

Donna-Joe and Stephanie will each receive $500,000.

B.

Donna-Joe and Stephanie will each receive $333,333, and Michelle's estate will receive $333,333.

C.

Donna-Joe and Stephanie will each receive $333,333, and Danny's estate will receive $333,333.

D.

Danny’s estate will receive the entire $1,000,000 death benefit.

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Questions 45

Ontario residents, Juan and Maria, are a married couple approaching retirement. They have asked their representative, Carlow, to review the details of Maria’s defined benefit plan (DBPP).

Which of the following statements about Maria's pension is CORRECT?

Options:

A.

Maria would be entitled to an increased benefit if Juan waived his survivor benefit.

B.

Juan would be entitled to receive at least 50% of Maria’s pension upon Maria's death.

C.

With Juan's consent, Maria can choose to reduce the survivor benefit to 25% of her normal pension amount.

D.

Juan will be entitled to the survivor benefit even if they are separated at the time of Maria'sdeath.

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Exam Code: LLQP
Exam Name: Life License Qualification Program (LLQP)
Last Update: Dec 5, 2024
Questions: 150

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