IFSE Institute LLQP Exam Practice Test Instant Access

Question 1

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 2

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 3

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 4

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 5

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?

AThe Insurers Act.

BThe Distribution Act.

CThe Act respecting insurance.

DThe Act respecting prescription drug insurance.

Answer : B

The Act that governs the definition and role of insurance of persons representatives in Quebec is the Distribution Act. This legislation outlines the roles, qualifications, and responsibilities of professionals licensed to offer life and health insurance products. It is crucial for anyone aspiring to become an insurance representative in Quebec to familiarize themselves with this Act, as it sets out the requirements and framework for licensure, conduct, and the scope of practice in this field.

Question 6

Sabrina is an insurance representative with an insurance of persons certificate issued by the Autorit des marchs financiers (AMF). Her client, Stephanie, is a Quebec resident who accepted a job with Service Canada, in Ottawa, and purchased a condo there. Stephanie calls Sabrina to explain that her new job requires her to work in Ottawa three days per week, but she is still a Quebec resident; she spends four days a week with her family in Granby, Quebec. Stephanie asks Sabrina if she can buy mortgage insurance from her to help cover the mortgage on her new condo.

What should Sabrina answer her?

AYes, they can complete and sign the application in Ottawa because Stephanie is a Quebec resident.

BYes, but they would have to complete and sign the application in the province of Quebec.

CNo, because Stephanie is a federal government employee.

DNo, because Stephanie's condo is outside of the province of Quebec.

Answer : B

In Quebec, insurance regulations require that insurance contracts for residents must be completed within Quebec to be considered valid under Quebec law, regardless of the location of the insured property. Since Stephanie is a Quebec resident, the insurance contract, including the application, must be completed and signed in Quebec. The fact that Stephanie's condo is located in Ontario does not affect the validity of obtaining mortgage insurance from a Quebec-licensed representative as long as the process adheres to Quebec's legal requirements. This maintains compliance with provincial licensing and residency rules under the AMF.

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Question 7

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