IFSE Institute LLQP Exam Practice Test Instant Access

Question 1

Owen meets with his insurance agent, Rachel, to review his investments. Owen is interested in segregated funds. In particular, he wants to know more about the reset feature.

What should Rachel tell Owen about resetting his funds?

AAll segregated funds offer a reset feature.

BThe reset feature may be automatic.

CThere is no additional cost for a fund that provides a reset feature.

DThe reset feature can be used if the market value increases or decreases.

Answer : B

Rachel should inform Owen that some segregated funds offer an automatic reset feature, which adjusts the guaranteed value periodically based on the fund's market performance. This can lock in gains during rising markets without requiring manual intervention. According to LLQP resources, automatic resets can occur on specific anniversaries or under certain conditions specified in the contract.

Option A is incorrect as not all segregated funds offer a reset feature. Option C is incorrect as there may be costs associated with funds that provide reset options. Option D is incorrect because resets typically lock in gains, not losses.

Question 2

Emma, an employee at MagicLand, is part of the company's group registered retirement savings plan (RRSP). During her tenure, she accumulated over $70,000 in the plan and all of her contributions are invested in segregated funds. She meets with Jun to invest in an individual segregated fund. Jun tells her that there are some differences between group and individual segregated funds.

How are Emma's group segregated funds DIFFERENT from an individual segregated fund?

AThey have higher sales charges.

BThey charge switching fees.

CThey offer death benefit guarantees at a special rate.

DThey have lower management expense ratios (MERs).

Answer : D

Group segregated funds typically have lower Management Expense Ratios (MERs) than individual segregated funds because group plans benefit from economies of scale and pooled investment options. LLQP highlights that group plans often have reduced fees compared to individual plans due to collective investment and reduced administrative costs.

Options A and B are incorrect as group plans typically feature lower costs and don't often charge switching fees. Option C is incorrect as individual segregated funds typically have more flexible death benefit guarantee options, not special rates in group plans.

Question 3

Jessica is 61 years old and has $460,000 invested in a registered retirement savings plan (RRSP). She is retiring due to health issues that are expected to reduce her life expectancy and will prevent her from working until she is 65. She would like to transfer her RRSP funds into an annuity that will pay her monthly benefits for the rest of her life.

Which of the following annuities is the BEST option for her to purchase?

ATerm annuity to age 90.

BLife annuity.

CLife annuity with a 20-year guaranteed period.

DImpaired life annuity.

Answer : D

Due to Jessica's reduced life expectancy, an impaired life annuity would provide higher monthly payments than a standard life annuity. This type of annuity takes her medical condition into account, offering larger payouts based on a shorter expected payment period. LLQP resources recommend impaired life annuities for individuals with significant health issues, as these provide better income compared to other types.

Options A and C offer a fixed period but don't maximize monthly income for someone with a reduced life expectancy. Option B would provide a standard income for life but not the potentially enhanced income from an impaired annuity.

Question 4

Lily works for Cloud 9 Inc. She earned $120,000 in Year 1 and $125,000 in Year 2. Lily contributes 5% of her income into a defined contribution pension plan (DCPP), and this contribution is matched by the employer. Lily has unused contribution room of $15,000 and wants to know how much she can contribute to her registered retirement savings plan (RRSP) in Year 2.

A$24,600

B$25,000

C$30,600

D$31,250

Answer : A

Lily's RRSP contribution room is reduced by her DCPP contributions. Her total income for Year 2 was $125,000, and she contributed 5% ($6,250) to the DCPP, matched by the employer, for a total of $12,500. The Pension Adjustment (PA) for her DCPP contribution would be $12,500, which reduces her RRSP contribution room.

Calculation:

RRSP limit based on previous year's income (18% of $120,000): $21,600

PA reduction: $12,500

Remaining RRSP contribution room for Year 2: $21,600 - $12,500 = $9,100

Including her unused contribution room: $9,100 + $15,000 = $24,100

So, Lily can contribute $24,600 to her RRSP in Year 2.

Question 5

Luisa owns a balanced segregated fund currently valued at $50,000. Her mother Linda is the current revocable beneficiary of the policy. However, Luisa has been dating Benjamin for a year and would like to name him as the new beneficiary of her policy.

Which of the following statements about modifying the beneficiary designation is CORRECT?

AThe change will take effect on the date that the insurer receives the change of beneficiary form.

BSince Linda is Luisa's named beneficiary, she would need to consent to the change.

CLuisa can modify the designation anytime.

DLuisa can call the insurer's head office to notify them of the change.

Answer : A

Beneficiary changes in insurance contracts generally become effective once the insurer receives and processes the signed change form. This is supported by LLQP material, which specifies that changes to beneficiary designations must be documented and received by the insurer for the new designation to take effect. Since Linda is a revocable beneficiary, Luisa can make this change without requiring Linda's consent.

Option B is incorrect as revocable beneficiaries do not require consent for changes. Option C is too general, and D is incorrect because a formal written change form is typically required.

Question 6

A few months ago, Urmish filed a complaint to the Autorit des marchs financiers (AMF) about the services he received from his insurance agent, Jab

a. The complaint was heard by the discipline committee, and Jaba was found guilty and ordered to pay a $10,000 fine. Jaba is upset and does not agree with the verdict. She would like to appeal the verdict.

Which of the following statements is CORRECT?

AA decision made by the discipline committee may be appealed to the Chambre de la scurit financire (CSF).

BA decision made by the discipline committee may be appealed to the Court of Quebec.

CA decision made by the discipline committee may be appealed to the AMF.

DA decision made by the discipline committee cannot be appealed.

Answer : B

In the context of Quebec, decisions made by the discipline committee of professional bodies under the authority of the Autorit des marchs financiers (AMF) are subject to appeal processes established by Quebec law. The Court of Quebec is the designated body for appeals concerning decisions rendered by disciplinary committees. Specifically, when an insurance agent like Jaba disagrees with the disciplinary action taken by the AMF's discipline committee, the proper channel for appeal is the Court of Quebec, not the AMF, Chambre de la scurit financire (CSF), or any other entity.

The Chambre de la scurit financire (CSF) itself does not serve as an appellate body for these disciplinary decisions but functions as a regulatory body to oversee the ethical and professional conduct of financial services professionals in Quebec. The AMF, while overseeing the financial markets, also does not handle appeals on behalf of its discipline committee.

This appeals process aligns with professional conduct standards and legal recourses as covered under Quebec's framework for insurance professionals. Under LLQP guidelines and relevant regulations, appeals must proceed through established legal channels, such as the Court of Quebec, ensuring that disciplinary decisions are subject to judicial review when contested.

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Question 7

Dominic suffers a heart attack on October 1 and dies a little over a month later, on November 7. At the time of his death, he owned a $150,000 critical illness (CI) insurance policy, purchased 10 years earlier. Dominic never failed to pay the $100 monthly premium. When he died, the insurer had not yet issued the benefit payment.

How will the CI benefit be treated?

AIt will not be paid.

BIt will be paid to Dominic's next of kin.

CIt will be payable to Dominic's estate.

DDominic's estate will receive a return of premiums.

Answer : A

Critical illness (CI) insurance pays a lump-sum benefit upon diagnosis of a covered illness, but typically requires the insured to survive for a specified period (often 30 days) following the diagnosis. Although Dominic suffered a heart attack, he did not die immediately. However, he passed away within the 30-day survival period following the heart attack, which is a common requirement in CI policies for benefit payment. Since the survival requirement was not met, the benefit will not be paid. Generally, in such cases, the insurer may refund premiums if specified in the policy, but the CI benefit itself would not be payable.

Topic 4, Ethics and Professional Practice (Civil Code)

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