IFSE Institute Life License Qualification Program (LLQP) Exam Practice Test

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Total 150 questions
Question 1

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?



Answer : D

Since Remi's annuity was purchased with funds from his registered pension plan, it is likely subject to locking-in provisions, which restrict changes to the beneficiary designation once annuitized. LLQP guidelines state that pensions converted into registered annuities are generally subject to locking-in rules, which often prevent changes to beneficiary designations unless in cases of spousal consent or specific contractual allowances.

Option B is incorrect, as spousal consent is not relevant when the designation is already restricted. Options A and C are also incorrect, as they do not address the locking-in nature tied to the pension plan.


Question 2

Planet Source decides to implement a defined contribution pension plan (DCPP) for its 75 employees. The company's president appoints Josie, the human resources director, as the plan administrator.

Which of the following BEST describes Josie's responsibility as a plan administrator?



Answer : A

As a plan administrator for a defined contribution pension plan (DCPP), Josie's primary responsibility is to manage the pension plan, which includes overseeing day-to-day operations, ensuring regulatory compliance, and handling communications with plan members. According to LLQP, plan administrators are tasked with ensuring the effective management and administration of the plan, rather than setting benefit structures or addressing funding issues, which are typically responsibilities of the employer.

Options B, C, and D describe responsibilities typically held by the employer or plan sponsor, not the administrator.


Question 3

Caleb meets with Miles, his insurance agent, to invest for his retirement. Caleb tells Miles that he will not need his funds for the next 25 years, he is comfortable with market fluctuations, and he would like a fund that mimics the S&P/TSX Composite index.

Which of the following funds will best suit Caleb's needs?



Answer : D

Since Caleb is looking for a fund that mirrors the S&P/TSX Composite index, an index fund would be the best choice. Index funds are specifically designed to track the performance of a specific index, providing broad market exposure at a low cost. This aligns with Caleb's objectives of long-term investment with a strategy that matches a known market benchmark, as emphasized in LLQP's sections on investment options.

Other options like equity, dividend, and target date funds do not directly track an index in the way that an index fund does, making them less suitable for Caleb's stated preference.


Question 4

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 her store. 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?



Answer : D

Creditor protection is a significant advantage of segregated funds over other investment types, especially for business owners like Dakota, who may face potential liability or creditor claims. According to LLQP guidelines, segregated funds, when properly structured with a designated beneficiary, can protect invested assets from creditors in the event of bankruptcy or other financial difficulties. This protection is often a critical benefit for small business owners seeking to shield personal assets.

While options A, B, and C offer benefits of segregated funds, they are not as directly valuable to Dakota's situation as creditor protection, which offers security specific to her needs as a business owner.


Question 5

Mohammed is an employee at Optima Plus Inc. Over the years, he accumulated $15,000 in the company's group plan. He knows that his contributions into the plan are not tax-deductible, and he is not taxed on the funds when he makes a withdrawal.

What type of plan does Mohammed have with his employer?



Answer : C

Mohammed's plan allows him to make contributions that are not tax-deductible, and he is also not taxed on withdrawals, indicating that his employer's plan is a group TFSA. In a TFSA, contributions are made with after-tax dollars, and withdrawals (including any growth) are tax-free, consistent with the LLQP outline on TFSAs. This is distinct from other retirement accounts, such as RRSPs, which provide tax deductions on contributions but tax the withdrawals as income.

Options A, B, and D are incorrect because these plans involve different tax treatments where contributions may be tax-deductible, and withdrawals are generally taxable.


Question 6

Arianna, a healthy 61-year-old university professor, is retiring this year and wants to transfer the funds she accumulated in her registered retirement savings plan (RRSP) into an annuity. She is looking at different options and would like to know which of the following annuities will pay the highest monthly benefit.



Answer : A

A life annuity typically provides the highest monthly benefit compared to other annuity types because it does not include additional guarantees or features that reduce the payout, such as a guarantee period or indexing. Since Arianna is healthy and seeking the highest monthly income, a standard life annuity, which pays a fixed income for life without any additional features, will maximize her monthly benefit. LLQP resources confirm that adding options like guarantees or indexing typically lowers the monthly payout due to the insurer's increased liability.

Option B would provide a lower benefit than a standard life annuity because of the 10-year guarantee. Option C (Indexed annuity) would have lower initial payments due to the cost of inflation protection, and Option D (Joint life annuity) would provide less income as it is designed to continue payments to a surviving spouse.


Question 7

Hussein wants to purchase a segregated fund. He has been following the news and believes the pharmaceutical sector will take off soon, and he wants to purchase a fund that will capitalize on his market view. He understands market fluctuations and is comfortable with the level of risk involved because he would only need to access these funds in 20 years.

Which of the following would be the most appropriate fund for Hussein?



Answer : B

A specialty fund would be the most suitable option for Hussein, given his specific interest in the pharmaceutical sector. Specialty funds focus on specific sectors or industries, allowing investors to capitalize on particular market views and trends. Hussein's belief in the potential growth of the pharmaceutical sector and his comfort with market fluctuations over a long investment horizon aligns well with a specialty fund. According to LLQP, specialty funds are suited for investors seeking exposure to specific industries and who are willing to accept the higher risk associated with concentrated investments.

Option A (Bond fund) does not align with Hussein's interest in the equity market, particularly in the pharmaceutical sector. Options C and D (Balanced and Target date funds) are not focused on a specific sector and instead offer broader diversification across asset classes.


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Total 150 questions