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Free IFSE Institute LLQP Practice Exam with Questions & Answers | Set: 2

Questions 11

Larissa is a 65-year-old retired marketing executive. She is single and has no dependents. Larissa accepted a generous retirement package from her employer five years ago and used her early retirement cash bonus to consolidate her financial affairs. She paid off mortgages on both her principal residence (a condo) and her vacation cottage. The fair market value (FMV) of the real estate increased significantly over the years. She named her sister Natalya as the sole beneficiary of her estate. In addition to the two properties, Larissa's estate includes a registered retirementsavings plan (RRSP) and shares of Apple Inc. that she purchased in her tax-free savings account (TFSA) 10 years ago. If Larissa were to pass away today, which of her assets would be fully taxable on her final income tax return?

Options:
A.

The condo.

B.

The cottage.

C.

The TFSA.

D.

The RRSP.

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Questions 12

Rene and Christine are 42-year-old twins. They are currently in the middle of a career change and have decided to become entrepreneurs by buying a food franchise.

They are both in excellent health and only Rene is an average smoker.

In setting up the financial structure of their business, they each decided to take out a $400,000 10-year term life insurance policy, designating each other as irrevocable beneficiary.

What can we say about the premiums for the life insurance policies that will be issued?

Options:
A.

Both policies will have the same premium because Rene and Christine are twins.

B.

The premium for Christine's policy will be higher because statistics indicate that she will live longer than Rene.

C.

The premium for Rene's policy will be higher because statistics indicate that he will live longer than Christine.

D.

The premium for Rene's policy will be higher because he is a man and an average smoker.

Questions 13

Germain is a life insurance agent. This morning, he receives a call from Jason, whose wife, Rosalie owned a $50,000 life insurance policy that she purchased from Germain seven years ago. Jason explains that Rosalie had a heart attack and died last week. Germain promises to help as much as he can.

Options:
A.

He can provide the claim form to Jason and help him fill it out.

B.

He can assure Jason that the payment will be made within 5 days after receipt of the claim.

C.

He can inform Jason that the death benefit will be paid within 30 days of Rosalie’s death.

D.

He can assure Jason that he will settle the death benefit as quickly as possible.

Questions 14

Donald finds out from his doctor that he only has about 10 months to live. He owns a $100,000 life insurance policy with a terminal illness benefit of $50,000. Donald has named Yvana as the policy's irrevocable beneficiary.

Donald wants to know whether he has to obtain Yvana's consent concerning the amount he will be paid as the terminal illness benefit. He would also like to know how much Yvana will receive after his death.

What should his insurance agent tell him?

Options:
A.

He does not have to obtain Yvana's consent. He will collect $50,000 before taxes and Yvana will receive $50,000 tax free.

B.

He does not have to obtain Yvana's consent. Both he and Yvana will receive $50,000 before taxes.

C.

He must obtain Yvana's consent. He will collect $50,000 tax free and Yvana will receive $50,000 before taxes.

D.

He must obtain Yvana's consent. Each of them will collect $50,000 tax free.

Questions 15

Aaliyah is a 37-year-old account manager at a large pharmaceutical company. She earns $300,000 a year plus bonuses. She meets with Theo, an insurance agent, to review her life insurance needs. Theo deduces that Aaliyah needs a $250,000 universal life (UL) insurance policy. Aaliyah agrees but states that she wants to keep her premiums low. Which of the following UL death benefit options would BEST suit her needs?

Options:
A.

Level death benefit.

B.

Level death benefit plus account value.

C.

Level death benefit plus cumulative premiums.

D.

Indexed death benefit.

Questions 16

Angela works in a biomedical research lab where she has been assigned to discover possible antidotes to the anthrax virus. While the discovery process of testing possible antidotes would expose her to the deadly virus, she is excited about the assignment.

Knowing that anthrax can be contracted through infected food, air or contact with skin, what risk management strategy would Angela employ by wearing protective gear over her mouth and skin?

Options:
A.

Risk transfer.

B.

Risk retention.

C.

Risk avoidance.

D.

Risk reduction.

Questions 17

Coraline owns a $250,000 whole life insurance policy. She purchased the policy last year and does not have any funds accumulated in her cash surrender value (CSV). On December 30, Coraline assigns the policy to the cancer foundation, and she plans on continuing to pay the $200 monthly premium. Coraline calls her accountant James to ask him how much of her donation she will be able to use to obtain a charitable tax credit this year.

Options:
A.

$0

B.

$200

C.

$2,400

D.

$250,000

Questions 18

Paula is a business owner and likes to make important decisions herself. Her business is very successful and she has lots of disposable income. She has a self-direct investment account where she chooses the investment herself. However, despite doing some researches on investment, her own portfolio ends up with major losses.

She just gave birth to a new born baby and would like to have some life insurance coverage for her children’s expense in the event of her death. She wants a plan that can provide additional coverage over time and allows her to cover the effect of inflation as well, as she has lost confidence on making investment decisions.

What insurance plan can fit Paula's need?

Options:
A.

Whole life with PUA rider

B.

Whole life with GIB rider

C.

Universal life with LCOI with minimum funding option

D.

Universal life with YRT with maximum funding option

Questions 19

Ten years ago, Anastasia purchased a $125,000 10-year term renewable life insurance policy. Her insurance need has not changed, and she is still in good health. She asks her insurance agent Raphael what she should do.

Options:
A.

Renew her current policy at the same rate.

B.

Renew the policy at an increased rate.

C.

Renew her policy and restart the incontestability period.

D.

Shop around for a better rate.

Questions 20

The company Xtra is growing. Mr. Trenet, chair of the executive committee, invites his financial security advisor, Noah, to meet with them to underwrite an annuity contract. The treasurer of Xtra offers to invest $2,500,000 of the company’s retained earnings. Before voting on a resolution to designate a policyholder, the treasurer asks Noah if Xtra can be designated as the policyholder instead of Mr. Trenet. What answer should Noah give?

Options:
A.

Only an individual can be a policyholder; therefore, Noah can recommend that Mr. Trenet be the policyholder

B.

For Xtra to become the subscriber of the contract, the investment amount must come from aregistered plan, such as a retirement fund

C.

Because Xtra is a legal person, Xtra can be the policyholder; Mr. Trenet must be the subrogated annuitant to approve decisions on behalf of Xtra

D.

If the capital is not registered, Xtra can be the policyholder