1. Hannah is applying for a life policy on her girlfriend Sarahs life. The policy is $500,000...

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1. Hannah is applying for a life policy on her girlfriend Sarah’s life. The policy is $500,000 and carries a large premium. Hannah is the main earner, so she is concerned about not being able to pay the premium if she becomes disabled. As a result, she would like to add a waiver of premium rider.How would the policy be underwritten?

a. The policy would be underwritten on Sarah’s life. The waiver of premium rider does not require underwriting.

b. The policy would be underwritten on Sarah’s life, and the waiver of premium would be underwritten on Hannah’s health.

c. Hannah will be the policyholder; therefore, all underwritten will be based upon her life.

d. The policy and the waiver of premium would be underwritten on Sarah

2. When assessing your client’s employment situation and how it impacts their insurance needs, which of the following clients would benefit the MOST from a life insurance policy that provides flexible premiums which can be lowered or increased?

a. Cecilia who is the owner of her new start-up business distributing canteen products to hockey arenas.

b. Federico who is a union employee for the Canada Revenue Agency and has attained seniority in the union.

c. Genoveva who is a stay-at-home mom who plans to return to the workforce when the children start school this year.

d. Scott who is the chief executive officer CEO of one of Canada top five banks

3. Tommy, A licensed insurance agent, meets with his client Ryan and Grace to review the universal life UL insurance policy they purchased two years ago. A lot has changed for the couple as they recently welcomed the addition of their first child, Gloria. The policy is on Ryan’s life with Grace named as a beneficiary. While reviewing the policy. Tommy recommends several changes. Which of the following changes would require underwriting?

a. Decreasing the monthly premium

b. Adding Gloria as a beneficiary via a trust

c. Making changes to the investments

d. Adding a family rider to the policy

4. Hannah Recently purchased a $100,000 terms insurance policy and her policy will also allow her to increase her coverage by $10,000 each year up to a maximum of an additional $200,000 of coverage. The premiums for the additional coverage will be based on Hannah’s age when the additions are made, however, she will not need to provide proof of insurability. Which one of the following is the type of rider that Hannah has on her policy?

a. Paid-up addition rider

b. Supplementary benefits rider

c. Guaranteed insurability rider

d. Accelerated death benefit rider

Martin, a licensed insurance agent, meets with his client Kim for an insurance review. Kim had purchased at 10-year term policy from Martin a few years ago and is now considering exercising the conversion option. Martin suggests Kim convert her 10-year term policy to either a term-100 or whole life policy. When Kim asks that what the differences between the two types of policies, which of the following is the CORRECT response that Martin should provide Kim?
Term-100 coverage typically has more stringent underwriting requirements but provides more comprehensive coverage than whole life. Course hero answer
Term-100 coverage would expire and leave the policyholder uninsured if they lived past age 100, whereas whole life coverage would still continue.
Whole life policy are generally more expensive than term-100 policies, although some may allow policyholder to Share in the insurance company’s surplus revenue. My answer
Whole life policy offer fewer non-forfeiture options than term-100 policies, primarily due to smaller cash surrender value.

2. Layla meets with her insurance agent, Trong, to discuss her insurance needs. Layla has an after-tax income of $3,800 per month, her rent is $1,200, and her other expenses total $1,500 per month. Trong calculates how much life insurance Layla needs using the income replacement approach, adjusted for taxes. Assuming an annual investment return of 5% and an average tax rate of 30%, what is the approximate amount of life insurance needed?

a. $650,000

b. $900,000

c. $1.3 million

d. $1.5 million

3. Which of the following incidents would definitely not qualify for worker’s compensation benefits?

a. Mike hurt his back riding a dirt bike and will now unable to work for three months.

b. Barney died at work when a crate fell on him.

c. Bernard is off work on a work-related sickness.

d. Jack died from cancer that was caused by chemical used at work during his 35-year career

4. You are preparing for a second meeting with new clients to present your insurance proposal. Part of your Presentation includes illustrations generated by the insurance company’s in-house software. Which of the following statements is correct concerning the use of illustrations?

a. Term policy illustration show the future policy dividends and their mortality deductions.

b. Term policy illustration show the premiums payable and the death benefit in each policy year.

c. Universal life policy illustration show a guaranteed policy dividend and the mortality deductions.

d. universal life policy illustration show the investment returns that the client can rely on the performance.

5. You have been assigned to service an existing client. Upon review of their current coverage, you discovered the insured has had a 20-year Limited Pay Term 100 policy for 28 years. The client has had the policy for a long time and it has been some time since he has reviewed it. He asked you to explain the policy to him. Which of the following correctly describes the policy in this scenario?

a. The client has coverage for life and most pay the permanent premiums for life.

b. The client cannot surrender the policy since the policy will not have a cash surrender value (CSV).

c. The client has coverage for life and he does not have to pay any more premiums.

d. The client no longer has coverage because the limited pay policy is paid up.

6. Harold purchased a $250,000 universal life (UL) policy with a level death benefit plus account value option. Harold bought the policy 7 years ago and named his adult daughter Corine as the beneficiary. According to his most recent statement, the account value of his policy is $19,100 with an adjusted cost base (ACB) of $12,400. Harold has a marginal tax rate of 33%. When he asks his insurance agent about the tax consequences of his UL policy, which of the following is the CORRECT response that the agent should provide Harold?

a. If Harold were to die today. Corinne would receive a $269,100 tax-free benefits. This was my answer

b. If Harold assigned his policy to Corinne, he would have tax owing off $1,105.50.

c. If Harold took out policy loan of $10,000, he would have a tax owing of $3,300.

d. If Harold were to die today. Corinne would receive a benefit of $252,211 after tax.

7. Janine owns a participating whole life policy with herself as annuitant and her son John as beneficiary. The policy has a current cash surrender value (CSV) of $65,000 and a death benefit of $200,000. Janine took a policy loan for $30,000 exactly 3 years ago and has made no payments to date. At the time she obtained the policy loan, the CSV was $40,000. The loan has a 5.5% interest rate, compounded annually, if Janine were to die today, how much would John receive?

a. $0

b. $164,773

c. $165,050

d. $200,000

8. Beau is a licensed life insurance agent and he comes across a death notification of one of his clients, Victor. Beau sold Victor a life insurance policy that named his daughter, Tessa, as a beneficiary. Which of the following statement concerning Beau’s responsibility in the claims process is CORRECT?

a. Beau is responsible for confirming that the policy was in force at the time of death.

b. Beau should not contact Tessa to initiate the claim under privacy requirements.

c. Beau should inform Tessa that Victor’s estate will be considered the claimant for his policy.

d. Beau is to facilitate the claims process by providing forms and assisting in her completion.

9. Melissa has a G2 whole life insurance policy with the face value of $200,000, a cash surrender value (CSV) of $45,000, and an adjusted cost basis ACB of $25,000. In a recent storm, Melissa incurred some damage to her cottage and is in urgent need of money for repairs. She is considering two options: either withdrawing from her policy or taking a policy loan. Which of the following statement CORRECTLY describes the consequences of Melissa’s options?

a. If Melissa withdraws $10,000 from my policy, she will incur a taxable policy gain of $10,000.

b. If Melissa withdraws $15,000 from her policy, she will incur a taxable policy gain of $10,000. That is my answer

c. If Melissa takes a policy loan of $10,000 her (ACB) will be increased to $35,000

d. If Melissa takes a policy loan of $15,000, her ACB will be reduced to $10,000.

10. Jian Is trying to figure out how much life insurance he requires. His net income is $5,250 per month. His mortgage payment is $2,000 per month and his lifestyle expenses total $2,500 per month. Using the income replacement approach, and assuming a 3.5% annual investment return, approximately how much life insurance should Jian purchase?

a. $130,000

b. $150,000

c. $1.5 million

d. $1.8 million

11. You are evaluating the insurance needs of your clients, Ivan 35, and Alexandra 34, a married couple with young children. Ivan works at the Ministry of Transportation in Ontario (MTO), he has worked for the MTO for 10 years, and he has seniority in the union, Alexandra is a stay-at-home mother to the children. When assessing their risks, which of the following should be important consideration in your risk analysis?

a. That there is a high probability of Ivan’s death

b. That the financial impact of Ivan’s death would be high

c. That there is a high probability of Alexandra’s death

d. That there is no financial impact of Alexandra’s death

12. Sorely Is an insurance agent and he meets with his client, Latoya, for an annual review. Latoya owns a whole life insurance policy with the face value of $250,000, an adjusted cost basis ACB or $44,000, and a cash surrender value CSV of $68,000. The annual premium on her policy is $8,000. Latoya tells sorely that she would like to make a charitable donation to her favorite charity. Which of the following statements about charitable donation is CORRECT?

a. If Latoya assigns the policy to a charity, she will receive a tax credit based on a $44,000 charitable donation in the current year.

b. If Latoya assigns the policy to a charity, she will receive a tax credit based on a $68,000 charitable donation in the current year.

c. If Latoya names a charity as beneficiary, she will receive a tax credit based on a $250,000 charitable donation in the current here.

d. If Latoya names a charity as beneficiary, she will receive a tax credit based on a $318,000 charitable donation in the current year.

13. Cory, Age 49, has two biological sons, Jason, age 26, and Gary, age 17. Jason and Gary were born when Cory was married to Betty. However, Cory and Betty have divorced and Cory now lives with his same-sex common-law partner, Tyrone, age 56. Cory and Tyrone have recently adopted a 15-year-old daughter, Preet. Cory has started working at Top Tech Inc. Where he has enrolled in the group benefits plan, which includes group life insurance coverage. Who would typically qualify for dependent life coverage under Cory’s group life insurance plan?

Jason

Gary

Preet

Tyrone

a. 1 and 2

b. 1 and 4

c.3 and 1

d. 3 and 4

14. You received a voicemail from Joe who says he is the brother and state executor of your life-insured client Harman. Joe informs you that Harman died suddenly. You have not been contacted by Harman’s window or the beneficiary, Nicolina. Which of the following is the correct course of action you should take in the claims process?

a. You must wait until you are contacted by either Nicolina or the insurance company before contacting the beneficiary.

b. You must request a copy of the probated will from Joe and then provide him with the claim forms and assist him in the claims process.

c. You can contact Joe and provide him with the claim form and assist him in the completion and processing.

d. You can contact Nicolina and provide her with the claim form and assist her in the completion and processing.

15. Daniella Has a universal life UL insurance policy with a face value of $1,000,000. The net cost of pure insurance and NCPI is $6,000 and Daniella pays annual premiums of $20,000. As a business owner and entrepreneur. Daniella owns a successful restaurant and would like to open another location to expand her business. In order to do so, she applies for a loan of $250,000 at her local bank. Subsequently, the bank approves Daniella’s loan, contingent upon the collateral assignment of her policy. What amount of her annual insurance premium can Daniela deduct as a business expense?

a. $1,500

b. $5,000

c. $6,000

d. $20,000

16. Jebran Is an insurance agent and he meets with his client, Sheena. Jebran informs Sheena that her application for insurance has been declined by the insurance company because there is no insurable interest. When Sheena asks Jebran to explain what this means was this means, which of the following would CORRECTLY explain why there is no insurable interest?

a. Sheena would be in a position to profit from the death of the life insured.

b. Sheena does not have the financial means to afford the policy premiums.

c. Sheena is exposed to fail to make a financial gain if the life insured dies.

d. Sheena is not expected to suffer a financial loss if the life insured dies.

17. Akila Is an insurance agent and she meets with a potential client, Hussein. Hussein is an entrepreneur and business owner and would like to learn more about how insurance can address the needs of his business. Which of the following statement about business life insurance is CORRECT?

a. If a buy-sell agreement is funded by business-owned insurance, premiums are generally tax-deductible.

b. In a split-dollar life insurance arrangement, the corporation could own the death benefit, while the employee could own the policy’s cash value.

c. If the policy acquires term life insurance on the key person because a lender requires it the business cannot deduct the premium from its business income.

d. Premiums are generally tax-deductible for Criss-cross insurance used to fund a cross-purchase buy-sell agreement.

18. Yen Has a universal life UL policy with a $500,000 level death benefit and a $58,000 cash surrender value. Her husband Xuan is beneficiary. Yen is remodeling her kitchen and decided to pledge her policy as collateral for a $40,000 loan from her local credit union. The interest rate on the loan is 3.5%. Assuming Yen does not make any principal or interest payments, if Yen dies exactly 1 year after taking the loan, how much will Xuan receive?

a. $458,600

b. $500,000

c. $516,600

d. $550,000

19. Natalie Worked as a scientist with a big salary of $90,000 she was a member of a company’s group benefit plan, including a basic life insurance death benefits of two times and salary. The plan also offered additional accidental death and dismemberment AD&D benefits, available for purchase in units of $25,000. Natalie had purchased 3 units. last week, Natalie attended a party and crashed her car on her way home, she died in the crash. The autopsy revealed that she had consumed alcohol and was over the legal limit at the time of the accident. How much would the insurance company pay to Natalie’s beneficiary in this case?

a. $0.00

b. $75,000

c. $180,000

d. $255,000

20. Zachary Is considering disposing of his whole life insurance policy and he has reached out to his insurance agent, Andy, to help determine what the tax consequences may be. Which of the following could cause an increase to the adjusted cost basis ACB of Zachary’s insurance policies?

a. The policy dividends which were paid to the Korean cash.

b. The policy loan taken against the cash surrender value of the policy

c. Interest paid on the policy loan which is deductible as an investment expense

d. The gains from the previous partial surrenders of the policy

21. Sloane Is an insurance agent and he meets with his client, Darcy, for an annual review. Darcy purchased a G2 whole life insurance policy several years ago. When Darcy asks Sloane about the policy’s tax implications and how the adjusted cost basis ACB is calculated, which of the following answers is CORRECT?

a. policy gain resulting from partial surrender, if included in income, will increase the ACB.

b. A dividend paid out to the policyholder when paid in cash will increase the ACB.

c. Dividends used to purchase paid-up additions will decrease the ACB.

d. Interest paid on a policy loan, if not deductible, with decrease the ACB.

22. Bala Learns that he has the beginning of demyelination which will lead to multiple sclerosis. He knows that he has not paid insurance premiums on his term 20 policy. In review of his policy, he is considering his options. Which of one of the following statements is correct with respect to missed premium payments?

a. If the insurance company receives a premium within the grace period the policy will remain in force.

b. Within the two-year grace period, if all missed premiums plus interests are paid, the policy will be reinstated.

c. If the life insured dies during the grace period, no death benefits will be paid.

d. If the policies are reinstated after lapse, the attained age on the policy will be reset to the current age.

24. Hannah Recently purchased a $100,000 terms insurance policy and her policy will also allow her to increase her coverage by $10,000 each year up to a maximum of an additional $200,000 of coverage. The premiums for the additional coverage will be based on Hannah’s age when the additions are made, however, she will not need to provide proof of insurability. Which one of the following is the type of rider that Hannah has on her policy?

a. Paid-up addition rider

b. Supplementary benefits rider

c. Guaranteed insurability rider

d. Accelerated death benefit rider

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