EstatePass

LLQP · Life Insurance

609 Life Insurance Practice Questions

Grouped by the competency components CISRO uses to build the exam, in the same proportions. Each question opens to its answer and a worked explanation.

1.Assess the client's needs and situation

35% of the exam · 213 questions
  1. During a needs analysis an agent learns that the client pays monthly support to a former spouse under a court order. How should this obligation be treated?1.1
  2. A client is the sole income earner in a household with a stay-at-home spouse and two young children. The greatest risk that life insurance on the client addresses is:1.1
  3. Why does a needs analysis ask about a stay-at-home parent's death, even though that parent earns no income?1.1
  4. A client in a blended family has children from a previous relationship and a new spouse. Which needs-analysis issue is most specific to this situation?1.1
  5. A client supports an adult child with a permanent disability who will never be self-sufficient. In the needs analysis this is:1.1
  6. Which of the following is a lifestyle factor that a needs analysis records because it affects both the risk of death and the insurer's underwriting?1.1
  7. A self-employed client's income fluctuates widely year to year. When determining the income to replace, the agent should:1.1
  8. A 58-year-old client plans to retire at 65 and has a pension that will pay a survivor benefit. How does time to retirement affect the life insurance need?1.1
  9. Which of the following is a capital expense arising at death, rather than an ongoing income need?1.1
  10. A client owns a cottage that has appreciated substantially. Why does this matter in a life insurance needs analysis?1.1
  11. When an agent lists a client's liabilities during fact-finding, which detail is most important for the insurance calculation?1.1
  12. A client wants to leave a bequest to a charity at death. In the needs analysis this is treated as:1.1
  13. A group client (an employer) asks an agent to review its group life plan. Which piece of information is specific to assessing a group rather than an individual?1.1
  14. Which of the following is the best example of a client's tax exposure that life insurance can address?1.1
  15. The needs-analysis process should begin with:1.1
  16. A client mentions that his employer could terminate the group plan at any time. Why is this relevant to his personal coverage?1.1
  17. An agent is determining the situation of a client who recently immigrated to Canada. Which factor is most likely to affect the recommendation?1.1
  18. Which resource available at death reduces the amount of life insurance a family needs?1.1
  19. A client's occupation is commercial diving. How does this affect the needs analysis and the recommendation?1.1
  20. A married client asks whether his spouse will receive anything from the Canada Pension Plan if he dies. The agent's accurate answer is:1.1
  21. A widowed client aged 62 with a low income asks about the Old Age Security Allowance for the Survivor. Which statement is correct?1.1
  22. Which question about a client's assets most directly affects the estate's liquidity at death?1.1
  23. A client says she has 'plenty of insurance through work' and declines a needs analysis. The most professional response is to:1.1
  24. A client's will leaves everything to her spouse. Her RRSP names her estate as beneficiary. What needs-analysis point should the agent raise?1.1
  25. Which of the following best describes 'tax exposure of the beneficiaries' as a needs-analysis item?1.1
  26. A client is a member of a professional association that offers group term life. Compared with an employer plan, the main difference for the needs analysis is that:1.1
  27. When reviewing a client's existing individual policy, which detail determines whether the coverage can continue past its current term without new evidence of insurability?1.2
  28. A client's existing term policy is convertible to age 65. She is 63. What should the review flag?1.2
  29. A client pays her life insurance premium monthly by pre-authorized debit. Compared with paying annually, she will generally:1.2
  30. An existing policy has a hazardous-sports exclusion. For a client who has since taken up skydiving, the review should conclude that:1.2
  31. In assessing existing group life coverage, why does the agent record the plan's 'end date' or termination provisions?1.2
  32. An employer group plan has a non-evidence maximum. This means:1.2
  33. Which benefit is most likely to be lost by a family when the insured dies, and should therefore be counted in the needs analysis?1.2
  34. A client owns a whole life policy issued before December 2, 1982. Why does the issue date matter?1.2
  35. The 'adjusted cost basis' (ACB) of a life insurance policy is important because:1.2
  36. A client wants to access the cash value of his whole life policy. Which method generally does NOT create a taxable disposition at the time?1.2
  37. A client's father died recently and the client wants to know whether the CPP death benefit will cover the funeral. The agent should explain that:1.2
  38. Which statement about CPP survivor's pension is correct?1.2
  39. A client who dies from a workplace accident may leave survivors entitled to:1.2
  40. A client in Quebec asks about survivor benefits. The agent should refer to:1.2
  41. An agent reviewing an existing policy notes the beneficiary is the client's ex-spouse from a marriage that ended ten years ago. The agent should:1.2
  42. A client holds a universal life policy and has not reviewed it for years. Which risk is specific to that product and should be checked?1.2
  43. A client has a participating whole life policy on 'premium offset' — dividends are paying the premiums. What should the review warn about?1.2
  44. Which of the following is a limitation of group life coverage that an individual policy does not share?1.2
  45. A client's employer pays the premiums for her group life coverage. How is this treated for her income tax?1.2
  46. A client is considering replacing an older permanent policy with a new one. Which tax consideration should the agent raise?1.2
  47. A client's existing term-to-65 policy will expire in three years, but her needs analysis shows a permanent estate-tax need. The review should:1.2
  48. When comparing the premiums of a client's existing policy with current market rates, the agent must remember that:1.2
  49. A client has an accidental death rider on his policy. In assessing his coverage, the agent should treat the rider amount as:1.2
  50. An in-force illustration for an existing universal life policy shows the policy lapsing at age 74 under current assumptions. The appropriate response is to:1.2
  51. A client asks the agent to skip the fact-finding and simply quote the cheapest term policy. The best response is to explain that:1.1
  52. A client has three small policies bought at different times from different insurers. During the review the agent should:1.2
  53. The income replacement approach to needs analysis calculates:1.3
  54. Under the capital needs approach, the total insurance need is found by:1.3
  55. If a needs analysis assumes a higher rate of investment return on the insurance proceeds, the calculated amount of insurance will be:1.3
  56. Why does inflation increase the amount of life insurance a family needs?1.3
  57. A client owns shares in a private company with a large accrued capital gain. How can life insurance address the tax triggered at death?1.3
  58. After completing the calculations, the agent finds the client's existing coverage exceeds the total need. The correct conclusion is that:1.3
  59. A client's needs analysis shows a large need for 20 years (until the children are independent) and a small permanent need for final expenses. The structure that fits is:1.3
  60. A client has enough cash flow to buy only half of the recommended coverage. The agent should:1.3
  61. 'Severity of risk' in a life insurance needs analysis refers to:1.3
  62. A client's job is likely to be eliminated within a year. How should the needs analysis reflect this?1.3
  63. Two equal partners run a business worth a substantial amount. If one dies, the survivor wants to keep the business and the deceased's family wants cash. The instrument that meets both needs is:1.3
  64. Under a share redemption (corporate-owned) buy-sell arrangement, on a shareholder's death:1.3
  65. Key person insurance is best described as:1.3
  66. Which is a reason a lender might require life insurance on a business owner?1.3
  67. A needs analysis shows the client's business would fail within months of his death because he is its only rainmaker. The insurance need this identifies is:1.3
  68. Which of the following is NOT typically a need that life insurance is used to meet?1.3
  69. Estate equalization is a life insurance need that arises when:1.3
  70. A client mentions she is a member of a group RRSP at work. For the life insurance needs analysis, this is relevant because:1.1
  71. For a two-income couple with no children and no debt, the needs analysis is likely to show:1.3
  72. A client's existing policy names her estate as beneficiary, and she has significant debts. The review should note that:1.2
  73. Why does the needs analysis ask about the client's will and powers of attorney?1.1
  74. A single parent with two children and no other adult in the household asks how her situation differs, for insurance purposes, from a two-parent family.1.1
  75. A client lives with a common-law partner. For beneficiary and creditor-protection purposes in common-law provinces, the partner is:1.1
  76. A client supports elderly parents overseas with monthly remittances. In the needs analysis, this is:1.1
  77. A client is in the middle of a divorce. The agent should:1.1
  78. Which of the following income sources should be included when determining the income a family would lose at the client's death?1.1
  79. A client owns an RESP for his children. In assessing his situation, the agent should note that:1.1
  80. A client asks whether her employer's pension plan will pay her spouse anything if she dies before retirement. The agent's accurate answer is:1.1
  81. A client with a spouse owns appreciated shares. On his death, if the shares pass to his spouse:1.1
  82. Which of the following is generally exempt from capital gains tax on the deemed disposition at death?1.1
  83. A client's business partner has a personal guarantee on the company's bank loan, as does the client. At the client's death:1.1
  84. Under the needs analysis, an 'emergency fund' for the survivors is:1.1
  85. A client says he is very risk-tolerant and would rather self-insure. The agent should explain that:1.1
  86. A newly married client asks whether he needs life insurance now, since his spouse earns a good income. The best analysis is:1.1
  87. Which of the following most directly affects the length of the income-replacement period in a needs analysis?1.1
  88. A client with a significant estate says he wants to leave his children 'the house, not a tax bill'. The needs-analysis item this points to is:1.1
  89. A client's will leaves her RRIF to her adult son, and she has named him beneficiary on the plan. At her death the tax on the RRIF is:1.1
  90. For a group client, 'vulnerability to termination' refers to:1.1
  91. A client says she wants coverage to 'pay off the mortgage and nothing else'. The agent should:1.1
  92. A client's income has just doubled with a promotion. The most important effect on his life insurance situation is that:1.1
  93. Which of the following documents is most useful for verifying a self-employed client's income during fact-finding?1.1
  94. A client has a large line of credit secured by his home, mostly undrawn. In the needs analysis the relevant figure is:1.1
  95. A client wants insurance to fund a bequest to a charity but also wants the donation credit during her lifetime. Which arrangement achieves that?1.1
  96. A client mentions she is a smoker who quit two months ago. For fact-finding and underwriting purposes, she is:1.1
  97. A client asks why the agent needs to know about her existing disability insurance when the discussion is about life insurance.1.1
  98. A client's existing term policy is renewable to age 85 and convertible to age 70. She is 66 and now needs permanent coverage. The relevant fact is:1.2
  99. A review reveals a client's whole life policy has an outstanding policy loan that has grown with interest for years. The consequence is that:1.2
  100. A client's group plan provides life coverage of twice annual salary to a stated maximum. He earns well above the salary at which the maximum applies. The review should note:1.2
  101. A client's existing universal life policy has a level cost of insurance. Compared with a YRT cost structure, this means:1.2
  102. A client's existing policy was issued on a 'preferred non-smoker' class. In the review this matters because:1.2
  103. A client holds a joint first-to-die policy with her spouse. They are divorcing. The review should raise that:1.2
  104. Which change to a policy issued before 2017 could cause it to lose its grandfathered tax status?1.2
  105. A client's spouse died last year. The client is receiving a CPP survivor's pension and asks whether it will change when she starts her own CPP retirement pension. The agent should explain:1.2
  106. A client's existing policy names her sister as beneficiary from before her marriage. She now has a spouse and children. The review should:1.2
  107. A client's mortgage insurance through the lender covers only the mortgage balance. His spouse asks what happens to the coverage if they refinance with a different lender.1.2
  108. In reviewing a client's group coverage, the agent finds an accidental death and dismemberment benefit equal to the basic life amount. The correct way to present it is:1.2
  109. A client owns a participating whole life policy whose dividends have been buying paid-up additions for twenty years. The review should recognize that:1.2
  110. A client's employer provides group life that ends at retirement, and he plans to retire next year with a permanent estate-liquidity need. The review's conclusion is that:1.2
  111. A client wants to cash in an old permanent policy with a large cash value and a low adjusted cost basis. The tax consequence the agent must explain is:1.2
  112. A client has a term policy with a 'return of premium' feature. In the review the agent should understand that:1.2
  113. A review finds that a client's existing policy has an aviation exclusion from when he was a private pilot. He stopped flying five years ago. The agent should:1.2
  114. In the income replacement approach, why is the survivors' income target usually set below 100% of the deceased's income?1.3
  115. A needs analysis projects income needs for 20 years using a real (after-inflation) rate of return. Which statement is correct?1.3
  116. A client's needs analysis shows a shortfall, but he already has enough liquid investments to cover it. The correct conclusion is:1.3
  117. For a business with three equal shareholders, a cross-purchase buy-sell agreement would require:1.3
  118. How should the amount of buy-sell insurance be determined?1.3
  119. A business wants to protect itself against the loss of its top salesperson, who is not an owner. The appropriate coverage is:1.3
  120. How is the amount of key person insurance commonly estimated?1.3
  121. A sole proprietor has no partners and no plans to sell. Which business-related life insurance need still applies?1.3
  122. A client's needs analysis includes a large amount for 'income taxes at death'. The agent should be able to explain that this figure typically covers:1.3
  123. What role does 'probability of risk' play in a life insurance needs analysis?1.3
  124. A client wants to fund a lump sum for a charity and also to leave education money for grandchildren. In the needs analysis these are:1.3
  125. Which factor most often makes the same family's calculated need change between reviews?1.3
  126. A client's needs analysis shows a large temporary need with a small permanent tail. She insists on buying only permanent insurance for the full amount. The agent should:1.3
  127. A married couple both work and each earns enough to support the household alone. Their only child has a disability requiring lifelong care. The dominant need identified is:1.3
  128. A needs analysis should present the client with:1.3
  129. A client asks the agent to include his expected inheritance from his parents as a resource in the needs analysis. The agent should:1.3
  130. In a needs analysis for a business owner, 'business continuation' needs include all of the following EXCEPT:1.3
  131. A client's needs analysis has been done in today's dollars with a real rate of return. Ten years later, at review, the agent should:1.3
  132. A client is the sole shareholder of a corporation that holds most of his wealth. Why does the needs analysis ask about the corporation's assets and structure?1.1
  133. A client wants to keep her financial details private and provides only approximate figures. The agent should:1.1
  134. A client asks whether Old Age Security pays anything to a surviving spouse under 60 with no children.1.1
  135. A client's spouse is a stay-at-home parent who would need to return to work after the client's death. The needs analysis should:1.1
  136. In an existing-coverage review, the agent finds the client's group life includes a waiver of premium provision. This means:1.2
  137. A review finds a client's term policy was 'backdated to save age' when issued. The practical effect today is that:1.2
  138. A client's existing policy shows a contingent policyholder. The purpose of that designation is:1.2
  139. A client has a corporately owned policy on his life with the corporation as beneficiary, but he wants the proceeds to go to his family. The review should point out that:1.2
  140. A review finds that a client's spouse is the irrevocable beneficiary of his policy and the couple are separating. The client wants to change the beneficiary. The agent explains that:1.2
  141. A client's existing policies were all sold by another agent who has left the business. The reviewing agent should:1.2
  142. A client's needs analysis produces a shortfall roughly equal to the coverage under her group plan. Her group plan is her only coverage. The correct interpretation is:1.3
  143. A client spends half of each year working overseas for a foreign employer. During fact-finding the agent should establish:1.1
  144. A client mentions that her spouse has a serious chronic illness. For the needs analysis this matters because:1.1
  145. A seasonal construction worker's income arrives in a few concentrated months each year. In determining his situation the agent should:1.1
  146. A client who bought coverage three years ago has just had a second child. The most important effect on his situation is that:1.1
  147. A young client's student loans were co-signed by her father. In the needs analysis this debt should be treated as:1.1
  148. A client owns a rental property with a mortgage and positive monthly cash flow. In determining his situation the agent should note that on his death:1.1
  149. A client holds a locked-in retirement account from a former employer. For the needs analysis the agent should record that:1.1
  150. A client has just bought a business financed partly by the vendor. His situation now includes:1.1
  151. A client mentions that her parents may soon need paid care. For her own situation this is relevant because:1.1
  152. A client is acting as executor of her late father's estate. During fact-finding the agent should recognize that:1.1
  153. A client earns far less than her spouse and asks whether she needs coverage at all. The agent should explain that:1.1
  154. A client intends to retire to another country in a few years. The agent should establish:1.1
  155. An incorporated professional pays herself in dividends rather than salary. For the needs analysis this matters because:1.1
  156. A client in a same-sex marriage asks whether the usual spousal rules apply to his estate. The agent should confirm that:1.1
  157. A client has a child with a disability savings plan and asks how it affects his own coverage need. The agent should note that:1.1
  158. A client carries a mortgage on her home and a second on a rental property. In recording her liabilities the agent should:1.1
  159. A business owner intends to sell his company in about five years. The needs analysis should treat the business as:1.1
  160. A client holds non-registered investments with substantial accrued gains. The needs analysis should record that on death:1.1
  161. A client's savings sit largely in a tax-free savings account. For the analysis this means the balance is:1.1
  162. A client's savings consist largely of shares in the employer she works for. The agent should note that:1.1
  163. A client currently receives long-term disability benefits from a group plan. In determining her situation the agent should note that:1.1
  164. A client holds a work permit expiring in two years and hopes to obtain permanent residence. The agent should:1.1
  165. A farming client wants the land to pass to the child who works it. The agent should note that:1.1
  166. A client's budget is already stretched and premiums would be difficult to sustain. During fact-finding the agent should:1.1
  167. A client holds a critical illness policy and asks whether it reduces her life insurance need. The agent should explain that:1.2
  168. A client's individual disability policy reduces its benefit by any group benefits he receives. In the review this means:1.2
  169. A client's group life coverage reduces sharply at a stated age and ends at retirement. In the review the agent should treat this as:1.2
  170. A client points to her group accidental death coverage as evidence she is well protected. The agent should explain that:1.2
  171. A client has creditor life insurance attached to a car loan. In the existing coverage review the agent should note that:1.2
  172. A client's existing policy has a waiver of premium currently in claim because he is disabled. In the review the agent must recognize that:1.2
  173. A client's existing policy includes a term rider expiring within a year. The review should establish:1.2
  174. An in-force illustration shows a client's universal life policy exhausting its fund within a few years. The agent should explain that:1.2
  175. A client's participating policy has been using dividends to buy paid-up additions for many years. The review should note that:1.2
  176. A client's existing policy is collaterally assigned to a bank securing a business loan. In the review the agent should note that:1.2
  177. A review finds an older permanent policy whose guaranteed premium is far below today's rates for the same coverage. The agent should:1.2
  178. A review shows a client's existing policy names her nine-year-old son as sole beneficiary. The agent should:1.2
  179. A client's existing policy has a settlement option already elected directing proceeds as monthly income. The agent should:1.2
  180. A client is leaving her employer and her group life coverage will end. The review should identify that:1.2
  181. A client is covered as a dependant under her spouse's group plan. The review should record that this coverage:1.2
  182. A client's policy was rated years ago for a condition that has since resolved. The agent should:1.2
  183. A client holds a policy issued in a foreign currency from a previous country of residence. In the review the agent should note that:1.2
  184. A review reveals that a client's whole life policy has an automatic premium loan running for several years. The agent should explain that:1.2
  185. A review finds a client holds both a mortgage life policy through her lender and a personal term policy covering the same debt. The agent should:1.2
  186. A client is beginning an extended unpaid leave of absence. Regarding his group life coverage the agent should:1.2
  187. A client's existing policy carries a guaranteed insurability rider with several option dates still unused. The review should:1.2
  188. A review shows that a client's former spouse owns a policy insuring the client's life. The agent should explain that:1.2
  189. A widowed client holds a joint last-to-die policy that insured both spouses. Following the first death the policy:1.2
  190. An in-force illustration for a participating policy shows values well below the original projection. The most likely explanation is that:1.2
  191. A needs analysis assumes the surviving spouse would move from full-time to part-time work to care for young children. The effect is that:1.3
  192. In a needs analysis, the final expenses component typically includes:1.3
  193. In analyzing the death of a stay-at-home parent, the most significant cost to quantify is usually:1.3
  194. A client's analysis counts group life coverage that ends when he changes employer. The correct treatment is to:1.3
  195. An agent increases the assumed rate of return used to discount a family's future income needs. The effect on the calculated lump sum is that it:1.3
  196. An analysis shows a large need lasting fifteen years and a smaller need lasting for life. The coverage design that fits is:1.3
  197. A client's main need is the tax that will arise on appreciating assets at death. The characteristic of this need is that it:1.3
  198. A client wants the family cottage kept rather than sold. The insurance need arising is to:1.3
  199. A corporation owns and is beneficiary of a policy on its sole shareholder. A key advantage is that the death benefit:1.3
  200. A shareholder has lent substantial money to his company and wants the loan repaid to his family at his death. Insurance can address this by:1.3
  201. A company wants coverage on a shareholder who is also its most productive employee. The analysis should recognize that:1.3
  202. An analysis shows a clear need on both spouses, but one of them proves uninsurable. The agent should:1.3
  203. An agent completes a thorough needs analysis for a young family. The analysis should be treated as:1.3
  204. A client's only identified need is to clear a mortgage that will be repaid in twenty years. The analysis supports:1.3
  205. A client supports an adult child who will never be self-supporting. The analysis should recognize a need that is:1.3
  206. A commissioned salesperson's income has varied widely over recent years. For the income replacement calculation the agent should:1.3
  207. An analysis shows a client's existing coverage exceeds her calculated need by a wide margin. The agent should:1.3
  208. A client's spouse would receive a substantial survivor pension from a defined benefit plan. In the analysis this should be:1.3
  209. Most of a client's savings sit in locked-in and registered plans. The analysis should note that these resources:1.3
  210. An agent runs both an income replacement calculation and a capital needs calculation and gets different results. The agent should:1.3
  211. A client owns real estate in another country. The needs analysis should flag that:1.3
  212. An agent completes a needs analysis and presents a coverage figure. The file should also record:1.3
  213. A client's circumstances have been stable for several years and he asks how often the analysis needs redoing. The agent should explain that a review is warranted:1.3

2.Analyze the available products that meet the client's needs

30% of the exam · 183 questions
  1. Level term insurance is characterized by:2.1
  2. Decreasing term insurance is most commonly matched to:2.1
  3. The main disadvantage of renewable term insurance for a long-term need is that:2.1
  4. A client who converts a term policy to permanent insurance will pay premiums based on:2.1
  5. Which of the following is a common situation where term insurance is the appropriate recommendation?2.1
  6. What distinguishes permanent life insurance from term?2.1
  7. The policy reserve in a whole life policy is:2.1
  8. The difference between a participating and a non-participating whole life policy is that:2.1
  9. A participating policyholder chooses the 'premium reduction' dividend option. The effect is that:2.1
  10. Dividends left to accumulate at interest in a participating policy are:2.1
  11. The 'enhanced' or 'term insurance' dividend option uses dividends to:2.1
  12. An automatic premium loan provision in a whole life policy:2.1
  13. A policyholder elects reduced paid-up insurance. From that point:2.1
  14. A limited-payment whole life policy (for example, 20-pay) is one where:2.1
  15. Which client is a typical candidate for whole life insurance?2.1
  16. Term-to-100 (T-100) insurance typically:2.1
  17. The main drawback of T-100 compared with whole life is:2.1
  18. In a universal life policy, the policyholder can generally:2.1
  19. The exemption test for a universal life policy limits:2.1
  20. A universal life policy with a 'level death benefit' pays:2.1
  21. A client wants to use a universal life policy as a wealth-transfer vehicle to her children. Which feature makes UL suited to that goal?2.1
  22. Leveraging a universal life policy means:2.1
  23. Which statement about the investment component of a universal life policy is correct?2.1
  24. A premium tax is charged on universal life deposits. This means:2.1
  25. The primary difference between whole life and universal life is:2.1
  26. In group life insurance, who is the policyholder?2.1
  27. A group plan provides 'dependent life' coverage. This means:2.1
  28. 'Optional' or 'voluntary' group life insurance differs from basic group life in that:2.1
  29. A group life plan reduces coverage by half at age 65. A 64-year-old member relying on it for estate needs should be advised that:2.1
  30. The survivor income benefit sometimes found in group plans pays:2.1
  31. A split-dollar arrangement between an employer and an executive means:2.1
  32. The capital dividend account (CDA) of a private corporation is credited with:2.1
  33. Premiums for a life insurance policy owned by an individual for personal protection are:2.1
  34. A policy loan taken from a whole life policy is taxable to the extent that:2.1
  35. Dividends paid in cash from a participating policy are:2.1
  36. When a corporation owns a life insurance policy on a shareholder and is the beneficiary, the premiums are:2.1
  37. An accidental death and dismemberment (AD&D) benefit in a group plan is 'basic' when:2.1
  38. Provincial sales or premium taxes applied to group insurance premiums:2.1
  39. In a group plan, the 'master contract' is:2.1
  40. How is a group typically defined for group life insurance purposes?2.1
  41. Membership classes in a group plan allow the sponsor to:2.1
  42. A joint first-to-die policy on a married couple:2.1
  43. Joint last-to-die insurance is most appropriate for:2.1
  44. A client wants insurance that will pay off her mortgage if she dies. Compared with the lender's mortgage insurance, an individually owned term policy typically offers:2.1
  45. What is the difference between a policy benefit and a rider?2.2
  46. An accidental death (AD) rider pays:2.2
  47. An AD&D rider differs from a plain accidental death rider in that it also:2.2
  48. The waiting period on a waiver of premium rider means:2.2
  49. A terminal illness (accelerated death) benefit allows the insured to:2.2
  50. A 'dread disease' (living benefit) rider on a life policy differs from stand-alone critical illness insurance in that:2.2
  51. A term rider on a permanent policy is used to:2.2
  52. A child rider typically provides:2.2
  53. A paid-up additions rider on a participating whole life policy lets the policyholder:2.2
  54. A parent/payor waiver rider on a child's policy provides that:2.2
  55. When comparing two insurers' waiver of premium riders, which difference most affects their value?2.2
  56. A critical illness rider attached to a life insurance policy:2.2
  57. The main reason to explain a rider's exclusions and limitations to the client is:2.2
  58. A guaranteed insurability benefit rider usually allows additional purchases:2.2
  59. A client with a family history of early heart disease asks which rider best protects her ability to obtain more life insurance later. The agent should point to:2.2
  60. A spouse rider on the client's policy provides:2.2
  61. Which rider directly addresses the risk that a disability would make premiums unaffordable and cause the policy to lapse?2.2
  62. Why might a business owner prefer to hold a permanent policy inside the corporation rather than personally?2.1
  63. A shareholders' agreement requires each shareholder to be insured but does not say who owns the policies. Before recommending a structure the agent should determine:2.1
  64. An 'exempt' life insurance policy is one whose:2.1
  65. Which permanent product is generally most appropriate for a client who wants guarantees and no involvement in investment decisions?2.1
  66. 'Modal factor' refers to:2.1
  67. Group term life insurance is generally provided as:2.1
  68. A client is choosing between adding a term rider to his permanent policy and buying a separate term policy. Which consideration favours the separate policy?2.2
  69. A cost-of-living rider on a life policy:2.2
  70. For which client is an accidental death rider LEAST likely to be a suitable use of premium dollars?2.2
  71. Which statement about riders is TRUE?2.2
  72. A yearly renewable term (YRT) policy differs from 10-year level term in that:2.1
  73. The cash surrender value of a whole life policy is:2.1
  74. A client asks whether waiver of premium would keep her universal life policy funded during disability. The agent should explain that:2.2
  75. A corporation that owns a life insurance policy on its shareholder transfers the policy to the shareholder personally. The tax issue this raises is:2.1
  76. A 'renewable and convertible' 20-year term policy gives the policyholder:2.1
  77. Increasing term insurance is designed to:2.1
  78. A guaranteed whole life policy differs from an adjustable whole life policy in that:2.1
  79. Which statement about the 'accumulation' dividend option is correct?2.1
  80. Why do insurers usually apply a surrender charge to a universal life policy's account value in the early years?2.1
  81. A client wants to know the minimum he must deposit into his universal life policy each year. The answer is:2.1
  82. In a universal life policy, a 'guaranteed interest account' option:2.1
  83. A client asks whether the death benefit of his universal life policy is guaranteed if his investments perform poorly. The accurate answer is:2.1
  84. A client with a substantial estate and maxed-out registered plans wants tax-sheltered growth she will not need in her lifetime. The product category that fits is:2.1
  85. Which statement about T-100 and the exemption test is correct?2.1
  86. A group life plan is 'non-contributory'. This means:2.1
  87. A contributory group life plan requires a minimum participation rate because:2.1
  88. A group member's certificate states coverage is 'two times annual earnings, rounded to the next thousand'. This is an example of:2.1
  89. On the termination of a group plan by the sponsor, members' life coverage:2.1
  90. Which of the following is generally TRUE about premiums for group term life compared with individual term life for the same person?2.1
  91. A 'living benefit' provision in a group life plan allows:2.1
  92. Under the 'exempt test' for a life insurance policy, the term 'accumulating fund' refers to:2.1
  93. A client asks whether the growth inside her exempt whole life policy is taxed each year. The answer is:2.1
  94. A policy's death benefit is paid to a corporation that owned the policy. The corporation's tax treatment of the receipt is:2.1
  95. A client wants to use life insurance to fund a bequest and asks whether the death benefit paid to the charity is taxable to the charity.2.1
  96. Which of the following best describes a 'preferred' underwriting class in term insurance pricing?2.1
  97. A client wants a permanent policy but is concerned about dividend uncertainty. Which product removes that uncertainty?2.1
  98. A joint last-to-die policy is generally cheaper than two single-life policies for the same total coverage because:2.1
  99. A business owner asks why her corporation should own a policy used for a share redemption buy-sell rather than the shareholders personally. A key reason is:2.1
  100. A 'premium offset' arrangement on a participating policy is best described as:2.1
  101. The 'net cost of pure insurance' (NCPI) matters to a policyholder because:2.1
  102. A client's employer offers a group RRSP and group life. The agent explains that, unlike the RRSP, the group life plan:2.1
  103. When a group member converts group life to an individual policy on leaving the employer, the individual policy is typically:2.1
  104. Which of the following is a common exclusion in group life and AD&D coverage?2.1
  105. A universal life policy's 'face plus fund' death benefit option results in:2.1
  106. Which product would an agent consider for a client who needs coverage for exactly the 25 years of a mortgage, wants the lowest level premium and has no permanent need?2.1
  107. A participating whole life policy's dividend scale is cut. A policyholder using the 'term insurance' (enhanced) dividend option will most likely see:2.1
  108. A client wants a whole life policy paid up by retirement at 65 and is now 45. The design that fits is:2.1
  109. In universal life, 'leveraging' the policy for retirement income has which principal risk?2.1
  110. A member's group plan pays a survivor income benefit of a percentage of salary to the spouse for five years. The agent evaluating the member's total coverage should treat this as:2.1
  111. A key person policy is owned by a corporation on its founder. The founder retires and the corporation no longer needs the coverage. Which option keeps the coverage useful?2.1
  112. A client wants coverage on her two young children mainly to guarantee their future insurability. The most cost-effective option is usually:2.2
  113. A client who is the sole earner asks which rider would most directly protect the policy if he could not work for two years after an accident. The answer is:2.2
  114. An accidental death rider commonly requires that death occur:2.2
  115. A waiver of premium rider on a term policy typically ends at:2.2
  116. A client is considering a critical illness rider versus a stand-alone critical illness policy. A reason to prefer the stand-alone policy is:2.2
  117. A 'return of premium on death' rider on a critical illness component means:2.2
  118. A guaranteed insurability benefit rider is generally NOT available or useful for:2.2
  119. Under a terminal illness benefit, the amount advanced is typically:2.2
  120. A spouse rider on a client's policy will most likely terminate when:2.2
  121. A client wants a rider that increases his death benefit each year without evidence, to keep pace with inflation. He should understand that:2.2
  122. Which rider is designed for a juvenile policy where the parent, not the child, pays the premiums?2.2
  123. When adding riders to a recommendation, the professional standard is to:2.2
  124. A client's ten-year level term policy is reaching the end of its first term and she does not want to pay the renewal rate. Her options are generally to:2.1
  125. A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:2.1
  126. A client exercises the conversion privilege on his term policy. The permanent premium will be based on:2.1
  127. A client who was rated as a smoker has now been tobacco-free for over a year. She should be told that:2.1
  128. An applicant is offered coverage with a flat extra premium rather than a table rating. The difference is that a flat extra:2.1
  129. A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:2.1
  130. A client wants to pay monthly rather than annually. The agent should explain that monthly payment:2.1
  131. A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:2.1
  132. A universal life policyholder is choosing among the investment options inside her policy. She should understand that:2.1
  133. A client takes a partial withdrawal from the fund of his universal life policy. The tax consequence is that:2.1
  134. A universal life policy offers a choice between a guaranteed and an adjustable cost of insurance. The adjustable option means:2.1
  135. A whole life policy's contract includes a table of guaranteed cash values. This means the values shown:2.1
  136. A client stopping premiums on a whole life policy chooses between reduced paid-up insurance and extended term insurance. Reduced paid-up:2.1
  137. A client considering term to age one hundred should understand that, compared with whole life, it generally:2.1
  138. A group member wants optional life coverage above the basic amount her plan provides. She should expect that:2.1
  139. A newly hired employee is told her group life coverage begins after a waiting period. This means:2.1
  140. An employer is considering changing the benefits under its group life plan. Members should understand that:2.1
  141. A group member becomes totally disabled and stops working. Under many group life plans her coverage:2.1
  142. A group member asks who decides where his group life benefit will be paid. The answer is that:2.1
  143. An employer pays the premium for its employees' group life coverage. For the employees this premium is:2.1
  144. Two shareholders must decide between a criss-cross and a corporate redemption buy-sell structure. A criss-cross arrangement means:2.1
  145. A shareholders' agreement fixes the share value for buy-sell purposes at an amount set years ago. The agent should point out that:2.1
  146. A client's operating company is owned by a holding company, and the family wants insurance on the shareholder. Placing the policy in the holding company may:2.1
  147. A client surrenders a permanent policy for its cash value. The policy gain to be included in income is:2.1
  148. A client asks whether the premiums on a policy assigned to her bank as loan security are deductible. The answer is that:2.1
  149. A client transfers ownership of a paid-up policy to a registered charity during her lifetime. The usual consequence is that she:2.1
  150. A parent transfers a policy insuring her child's life to that child. The tax rules generally permit:2.1
  151. A beneficiary receives a death benefit several months after the insured's death, with an additional amount added by the insurer. For tax purposes:2.1
  152. An older client in modest health wants only enough coverage for funeral costs and final bills. A suitable product is often:2.1
  153. A client wants certainty above all: a premium that never changes and values he can count on. The product that fits is:2.1
  154. Two insurers' waiver of premium riders differ in how disability is defined. The definition matters most because:2.2
  155. A grandmother owns a policy insuring her grandson and asks which waiver would protect it if she became disabled. The correct rider is:2.2
  156. A client asks whether a disability income rider on his life policy replaces a stand-alone disability policy. The agent should explain that a rider:2.2
  157. A client's critical illness rider lists some conditions as qualifying for a partial benefit. This means that:2.2
  158. A client wants to know whether a critical illness claim would reduce the death benefit of his life policy. The answer depends on whether the coverage is:2.2
  159. A terminally ill client draws an advance under the terminal illness benefit on her policy. At her death the beneficiary will receive:2.2
  160. A client asks about a rider that would release policy money if she needed long-term care. Such a rider generally:2.2
  161. A client's guaranteed insurability rider allows purchases at set ages and on certain life events. The typical qualifying events are:2.2
  162. A client holds a term rider on a permanent policy and asks whether it can become permanent coverage. The agent should:2.2
  163. A child covered by a child rider is approaching the age at which the rider ends. The usual provision allows the child to:2.2
  164. A payor waiver rider on a juvenile policy typically continues to waive premiums:2.2
  165. A client in his sixties asks why his accidental death rider no longer appears on his statement. The likely reason is that:2.2
  166. A cost of living rider increases a client's coverage periodically. The client should understand that each increase:2.2
  167. A client compares a paid-up additions rider with simply selecting the paid-up additions dividend option. The rider:2.2
  168. A business owner asks whether a rider could cover his business partner's life on his own policy. The agent should explain that:2.2
  169. A client cancels a rider halfway through the policy year. He should expect that:2.2
  170. A client asks to add a critical illness rider to a policy issued three years ago. The agent should explain that:2.2
  171. A client asks what happens to his riders if he surrenders the base policy. The answer is that the riders:2.2
  172. An agent notes that the riders available on a term policy are fewer than on a permanent contract. The main reason is that:2.2
  173. A client returns to work after a waiver of premium claim and becomes disabled again by the same condition. A recurrence provision would:2.2
  174. A client with a critical illness rider is diagnosed with a covered condition and dies a week later. The likely outcome is that:2.2
  175. A client who races motorcycles at weekends asks whether his accidental death rider would pay. The agent should:2.2
  176. A client wants his family to receive a monthly amount rather than a lump sum. A family income benefit rider provides:2.2
  177. A couple with a joint first-to-die policy asks what happens to their coverage if they separate. A policy split option would:2.2
  178. A disabled client asks whether her waiver of premium covers the riders as well as the base policy. The agent should:2.2
  179. An agent adds several riders to a recommendation because they improve the overall commission. This is:2.2
  180. A client can obtain the same protection either as riders on one policy or as separate contracts. The comparison should consider:2.2
  181. At delivery, an agent's explanation of the riders attached to a policy should cover:2.2
  182. A client's rider is scheduled to terminate at a stated age well before the base policy ends. The agent should:2.2
  183. Asked to explain the difference between a rider and a separate policy, the agent should say that a rider:2.2

3.Implement a recommendation adapted to the client's needs and situation

25% of the exam · 152 questions
  1. Underwriting is the process by which the insurer:3.1
  2. The 'agent's report' section of a life insurance application is used to:3.1
  3. The difference between a material misrepresentation and fraud on an application is that:3.1
  4. An applicant fails to mention a condition because she honestly thought it was minor; it turns out to be material. Within the first two years the insurer may:3.1
  5. Which of the following is generally a factor that increases life insurance premium rates?3.1
  6. A 'rated' or substandard policy is one where:3.1
  7. An Attending Physician's Statement (APS) is:3.1
  8. The role of the Medical Information Bureau (MIB) in underwriting is to:3.1
  9. Why might an underwriter request a motor vehicle report (MVR)?3.1
  10. Financial underwriting is used to:3.1
  11. An applicant is a private pilot. The underwriter is most likely to:3.1
  12. Basic amounts of group life insurance are issued without individual underwriting because:3.1
  13. Reinsurance is:3.1
  14. Which factor at the company level most directly affects the pricing of a life insurance product?3.1
  15. An applicant asks why he should care about the underwriting process as long as the policy is issued. The agent should explain that:3.1
  16. A temporary insurance agreement typically ends when:3.1
  17. An applicant's father and brother both died of heart disease before 55. In underwriting this is:3.1
  18. The insurer requires a paramedical exam for an application. This typically involves:3.1
  19. When presenting the findings of a needs analysis, the agent should:3.2
  20. A client's main need is to provide for a spouse with a special-needs dependant for life. The category of insurance that fits is:3.2
  21. What is the purpose and the main limitation of a policy illustration?3.2
  22. A written recommendation should specify, at a minimum:3.2
  23. Income splitting as a tax-efficiency strategy means:3.2
  24. A charitable donation made in the year of death:3.2
  25. A client wants the highest possible death benefit for a fixed monthly budget and has no other needs. The recommendation that best serves him is:3.2
  26. 'Leveraging or borrowing to invest' appears in the curriculum as a tax strategy because:3.2
  27. A client's need for estate liquidity at death is quantified at a large amount, but she is 78 and in poor health. The agent's recommendation process should:3.2
  28. When choosing between two similar products from different insurers, which comparison is most meaningful?3.2
  29. The application for life insurance, once accepted by the insurer, becomes:3.3
  30. A signed illustration is required with many permanent insurance applications because:3.3
  31. If the insurer issues the policy on terms different from those applied for (for example, with a rating), what must happen before the policy is in force?3.3
  32. The first premium is significant in contract formation because:3.3
  33. During the underwriting period the applicant's health changes materially. The applicant must:3.3
  34. Which sequence correctly describes the implementation process?3.3
  35. The characteristic that most distinguishes a suitable recommendation from a mere product sale is that:3.2
  36. A client wants to fund a future education need for a grandchild through life insurance. Which structure is commonly used?3.2
  37. 'Postponed' as an underwriting decision means:3.1
  38. The primary reason insurers ask about other insurance applied for or in force is:3.1
  39. A client asks whether she can change her mind after the policy is delivered. The agent should explain:3.3
  40. An agent recommends a policy and the client asks for the reasons in writing. The best practice is to:3.2
  41. An applicant with a well-controlled chronic condition is likely to be:3.1
  42. 'Gift strategies' as a tax-efficiency topic in the Life module refers to:3.2
  43. Which of the following is the best example of 'field underwriting' by an agent?3.1
  44. Medical evidence requirements (paramedical, blood profile, ECG) are generally determined by:3.1
  45. A blood and urine profile in life underwriting can detect:3.1
  46. An applicant's build (height and weight) is used in underwriting because:3.1
  47. Which of the following is a typical 'non-medical' limit in life underwriting?3.1
  48. An applicant travels frequently to regions the insurer considers high-risk. The underwriter is most likely to:3.1
  49. The difference between a 'flat extra' premium and a 'table rating' is that:3.1
  50. A temporary flat extra premium is typically used when:3.1
  51. An applicant receives a rated offer and wants to appeal. The agent's most useful action is to:3.1
  52. Which statement about the temporary insurance agreement's amount limit is correct?3.1
  53. Backdating a policy to 'save age' means:3.1
  54. An applicant's answers on the medical questionnaire conflict with information in the APS. The underwriter will most likely:3.1
  55. Which underwriting outcome is appropriate for an applicant recently diagnosed with a serious condition whose prognosis is not yet clear?3.1
  56. A 'conditional receipt' or 'conditional premium receipt' given when the first premium accompanies the application means:3.1
  57. Which of the following would most likely be treated as a material fact in life underwriting?3.1
  58. An inspection report ordered by an underwriter typically:3.1
  59. An underwriter assigns an applicant with several mild impairments to a rated class. The combined effect is usually determined by:3.1
  60. How does an insurer's 'retention limit' affect a large application?3.1
  61. Which client-level factor generally has the largest effect on life insurance premiums at a given age?3.1
  62. A group of employees is being underwritten for a new group life plan. Which factor would raise the insurer's concern?3.1
  63. An applicant asks whether genetic test results must be disclosed on a life insurance application. In Canada, the agent should be aware that:3.1
  64. When presenting a recommendation, why should the agent present at least one alternative?3.2
  65. A client's needs analysis shows a shortfall he cannot afford to close. In prioritizing, the agent should generally cover first:3.2
  66. A client asks why the illustration shows both 'guaranteed' and 'non-guaranteed' columns. The agent should explain that:3.2
  67. Which recommendation element addresses 'who gets the money if the primary beneficiary has died'?3.2
  68. A client wants to make tax-efficient gifts to adult children during her lifetime. Which point should the agent raise?3.2
  69. A recommendation for a business owner includes both personal and corporate-owned coverage. To avoid confusion, the written recommendation should clearly state for each policy:3.2
  70. A client insists on buying more coverage than the needs analysis supports and more than financial underwriting is likely to allow. The agent should:3.2
  71. A client's recommendation includes a life policy whose beneficiary will be a testamentary trust for minor children. The agent should coordinate with:3.2
  72. The purpose of the 'characteristics of the recommendation' listed in the curriculum — product, amount, term, premium, riders, beneficiaries, exclusions, clauses — is to ensure that:3.2
  73. A client has a large capital gains exposure on a farm she intends to pass to her son, who works the farm. Which two planning points should the agent raise?3.2
  74. A client wants to know how much life insurance is 'the right amount' in general. The correct professional answer is:3.2
  75. A client is choosing between a participating whole life policy and a universal life policy with a guaranteed account. She values simplicity and dislikes making financial decisions. The suitable recommendation is:3.2
  76. A client asks an agent to recommend an insurer solely on the basis of the lowest premium. The agent should also weigh:3.2
  77. During the recommendation, the client asks whether she can change her mind after buying. The agent should explain that:3.2
  78. A client with a high marginal tax rate and maximized registered plans wants to reduce tax on non-registered investment income. Which insurance-based strategy fits, and what caution applies?3.2
  79. A client's spouse is not present when the agent presents a recommendation that names the spouse as beneficiary and affects the household budget. Best practice is to:3.2
  80. Which recommendation would be considered unsuitable on its face?3.2
  81. A client has been offered a policy with a two-table rating. The agent explains the offer. The client asks whether accepting it is wise. The professional response is to:3.2
  82. When a client's stated objective conflicts with the needs analysis findings, the agent should:3.2
  83. At policy delivery, the agent should obtain:3.3
  84. The effective date of a life insurance policy is generally:3.3
  85. A client's application is approved but he has not paid the first premium when the policy is delivered. The agent should:3.3
  86. A client wants to keep an application 'on hold' after approval while deciding. The agent should explain that:3.3
  87. A pre-authorized debit form is part of implementation because:3.3
  88. During implementation, the agent learns the client wants the policy owned by her corporation instead of personally, as first applied for. The correct step is:3.3
  89. Under the free-look (rescission) right, if the client returns the policy within the period:3.3
  90. A client's policy is issued with an exclusion rider for a hazardous sport. Before delivery, the agent must:3.3
  91. Which of the following is a legitimate reason an insurer might refuse to issue a policy even after favourable underwriting?3.3
  92. The 'good health' statement at delivery asks the applicant to confirm:3.3
  93. A client's application shows the beneficiary as 'my wife' without a name. The best implementation practice is to:3.3
  94. An applicant's occupation is 'commercial fisher'. This occupation is relevant to underwriting because:3.1
  95. An applicant asks why the insurer wants to know about her alcohol consumption. The agent should explain that:3.1
  96. A large policy is applied for on a 68-year-old. The underwriter is most likely to request:3.1
  97. Which statement about insurers' use of the Medical Information Bureau is correct?3.1
  98. An applicant with a well-managed condition is offered standard rates by one insurer and a rating by another. This illustrates that:3.1
  99. A client asks whether he should name his estate as beneficiary so his will can direct the money. The agent should explain:3.2
  100. A recommendation for a client whose income is seasonal should consider:3.2
  101. A client's recommendation includes both a life policy and a critical illness policy. The written recommendation should explain the CI policy's relationship to the life coverage by:3.2
  102. A client's spouse has no income and no insurance. The needs analysis for the household should:3.2
  103. A client's policy was issued and delivered, but the insurer's records show the beneficiary designation form was never received. The consequence is that:3.3
  104. An applicant is awaiting the results of tests ordered after an abnormal finding. The underwriter is most likely to:3.1
  105. An applicant has applications pending with two other insurers and asks whether he must mention them. The agent should explain that:3.1
  106. An applicant has surgery scheduled for next month. The most likely underwriting response is to:3.1
  107. An applicant uses cannabis occasionally and asks how it will be treated. The agent should explain that:3.1
  108. An applicant has a history of depression, treated successfully and stable for several years. The likely underwriting outcome is:3.1
  109. A pregnant applicant asks whether she should wait until after the birth to apply. The agent should explain that:3.1
  110. An underwriter orders a driving record on an applicant. The information is relevant because:3.1
  111. An applicant has lived abroad for most of the last decade and medical records are hard to obtain. The underwriter is likely to:3.1
  112. An application is made on a child's life for a large amount while the parents hold little coverage themselves. The underwriter will likely:3.1
  113. An applicant's mother and two siblings developed a hereditary condition at a young age. The underwriter may:3.1
  114. An applicant repeatedly fails to attend the paramedical examination the insurer requires. The likely result is that:3.1
  115. A client is offered coverage through an accelerated process with no fluids or examination. The agent should explain that:3.1
  116. An applicant's request for coverage is declined. The agent should:3.1
  117. A client asks how long underwriting will take. The most useful answer identifies that the main delays are:3.1
  118. An agent learns during fact-finding that a client has a significant impairment. Good field underwriting means the agent should:3.1
  119. An applicant's blood pressure is well controlled on medication. The most likely underwriting outcome is:3.1
  120. A client's budget covers only part of the recommended coverage. A sound way to present the recommendation is to:3.2
  121. A complete recommendation should address the beneficiary designation because it determines:3.2
  122. A business owner asks whether her company or she personally should own a new policy. The recommendation must weigh:3.2
  123. An insurer offers a client coverage at a two-table rating. Before accepting, the agent should:3.2
  124. A client with a clear need proves uninsurable at every market the agent approaches. The recommendation should then:3.2
  125. An agent concludes that replacing a client's existing policy would genuinely benefit her. The recommendation must:3.2
  126. Two products meet a client's need, one cheaper and one with stronger guarantees. The recommendation should:3.2
  127. A young client needs a large amount now and expects a permanent need later, but cannot afford permanent coverage today. The recommendation should emphasize:3.2
  128. A client insists on naming her seven-year-old daughter as sole beneficiary. The agent should:3.2
  129. A couple disagrees, with one wanting substantial coverage and the other seeing little value in it. The agent should:3.2
  130. A recommendation places less coverage than the analysis calls for because of affordability. The file should record:3.2
  131. A client has just left employment to work for himself and has lost his group coverage. The recommendation should recognize that:3.2
  132. An agent notices that one insurer's illustration projects far better long-term values than its competitors. The agent should:3.2
  133. A recommendation involves a corporate structure with significant tax consequences. The agent should:3.2
  134. An agent recommends a product that costs more than an equivalent alternative. The file should show:3.2
  135. A complete recommendation should include a review date because:3.2
  136. A client offers to write the first premium cheque payable to the agent personally. The agent should:3.3
  137. At application, an agent must verify the client's identity. This requirement exists because:3.3
  138. The agent's report section of an application asks about the agent's observations of the client. The agent must:3.3
  139. An agent delivers a policy and obtains a delivery receipt. The receipt matters because it:3.3
  140. At delivery the agent should explain the contestability and suicide provisions because:3.3
  141. When setting up a pre-authorized debit for premiums, the agent should:3.3
  142. An agent implementing a replacement must ensure the replacement declaration is:3.3
  143. Completing the beneficiary section of an application, the agent should record:3.3
  144. An insurer issues a policy with an amendment the client must sign at delivery. If the client refuses to sign, the agent should:3.3
  145. A client cannot be reached for several weeks and an issued policy remains undelivered. The agent should:3.3
  146. A client wants to cancel her existing coverage as soon as she signs the application for a new policy. The agent must:3.3
  147. Several underwriting requirements are outstanding on a client's application. The agent should:3.3
  148. An agent collects the first premium with the application and gives the client a temporary insurance agreement. The client must be told that it:3.3
  149. After submitting an application, a client realizes she gave an incorrect answer about a past condition. The agent should:3.3
  150. A client wants proceeds held for her children under a trustee. At implementation the agent should:3.3
  151. Before handing over an issued policy, the agent should compare it with the application to confirm:3.3
  152. Once a policy has been delivered, the agent's implementation record should include:3.3

4.Provide customer service during the validity period of the coverage

10% of the exam · 61 questions
  1. Which life event is most likely to require a review of a client's life insurance?4.1
  2. A client is leaving Canada permanently. Why should the agent review her life insurance before she goes?4.1
  3. A client wants to change the name on his policy after marriage and update his address. The agent should:4.1
  4. A client wants to increase the face amount of an existing policy. Typically this requires:4.1
  5. An absolute assignment of a life insurance policy:4.1
  6. A collateral (partial) assignment differs from an absolute assignment in that:4.1
  7. A client asks the agent to help cancel a policy she no longer needs. The agent should:4.1
  8. Under the replacement rules, if an agent fails to complete and deliver the required replacement disclosure:4.1
  9. Which is a legitimate reason to recommend replacing an existing policy?4.1
  10. A term policy is approaching the end of its term. The agent's review should present the client with:4.1
  11. A periodic review cycle for life insurance clients is recommended because:4.1
  12. Which documents does an insurer normally require to process a death claim?4.2
  13. The insured's age was understated on the application. At the claim, the insurer will typically:4.2
  14. Which of the following could reduce the amount paid on a death claim?4.2
  15. The insured dies 18 months after the policy was issued. The insurer:4.2
  16. The agent's role when a client's beneficiary calls about a death is to:4.2
  17. A death benefit paid to a named beneficiary from a group life plan is:4.2
  18. When life insurance proceeds are payable to the estate rather than a named beneficiary, a practical consequence is that:4.2
  19. A claim for a death that occurred abroad is more complex mainly because:4.2
  20. After a death benefit is paid, the surviving spouse's own life insurance needs:4.2
  21. A client's divorce settlement requires him to maintain life insurance for his children with his former spouse as trustee. The agent should:4.1
  22. In most provinces, once the insurer has received satisfactory proof of claim, it is required to pay the death benefit:4.2
  23. To reinstate a lapsed policy, the insurer will typically require:4.1
  24. After a policy is reinstated, the contestability period:4.1
  25. A revocable beneficiary designation is changed by:4.1
  26. A client asks the agent to hold the beneficiary change form 'until next week' and dies in the meantime. The consequence is that:4.1
  27. A client wants to reduce the face amount of her policy because her needs have fallen. The agent should note that:4.1
  28. A client is unable to pay premiums temporarily on a whole life policy. Before letting it lapse, the agent should suggest:4.1
  29. A client's term policy is being replaced with a new one from another insurer because it is cheaper and he remains healthy. To protect the client, the agent should ensure that:4.1
  30. A policyholder wants to transfer her policy to her adult daughter as owner. The agent should explain that:4.1
  31. The primary purpose of a periodic policy review is to:4.1
  32. Which settlement option lets a beneficiary receive the death benefit as a guaranteed income for life?4.2
  33. A death benefit is left with the insurer under an interest-only settlement option. The tax treatment is:4.2
  34. The insured and the primary beneficiary die in the same accident and it cannot be determined who died first. Under the usual common-law rule for life insurance:4.2
  35. A claimant has trouble obtaining a death certificate because the insured disappeared in a plane crash at sea and no body was recovered. The claim process will likely require:4.2
  36. A death claim reveals that the insured was a smoker although the policy was issued at non-smoker rates on the basis of the application. Within the contestability period, the insurer may:4.2
  37. A beneficiary asks the agent how long a death claim usually takes. The honest answer is:4.2
  38. The executor of an estate contacts the agent about a policy payable to a named beneficiary. The agent should explain that:4.2
  39. At a claim, the insurer requests an Attending Physician's Statement about the cause of death. The purpose is:4.2
  40. A group life claim is submitted for a former employee who left the company eight months earlier without converting. The likely outcome is:4.2
  41. After paying a death claim, the agent's continuing service to the family should include:4.2
  42. A client with a policy issued four years ago asks to add a waiver of premium rider. The agent should explain that:4.1
  43. A client's monthly premium withdrawal is returned by the bank for insufficient funds. The agent should:4.1
  44. A client moves and the insurer's notices are returned undelivered. The main risk is that:4.1
  45. A client paying annually asks to switch to monthly payments. The agent should explain that:4.1
  46. A client wants to withdraw part of the fund from his universal life policy. Before processing the request the agent should explain that the withdrawal may:4.1
  47. A client asks to transfer ownership of her non-registered policy to a family trust. The agent should explain that:4.1
  48. A participating policyholder wants to change her dividend option from paid-up additions to cash. The agent should explain that:4.1
  49. A client whose children are grown asks to remove the child rider from his policy. The agent should:4.1
  50. A client sells the business that owned a key person policy on his life. The service review should address:4.1
  51. A client can no longer afford the premiums on her whole life policy. Before she surrenders it the agent should explain:4.1
  52. A family believes a policy existed but cannot find the paperwork. The agent should:4.2
  53. A beneficiary designation was changed a few weeks before the insured's death, and the previous beneficiary objects. The agent should:4.2
  54. An insured dies holding a policy collaterally assigned to a bank, with his spouse named beneficiary. The proceeds will be applied:4.2
  55. A claim is submitted where the death resulted from an activity excluded by the policy. The likely outcome is that:4.2
  56. A registered charity is the named beneficiary of a client's policy. On the claim the charity will:4.2
  57. A client elected a settlement option paying his beneficiary a monthly income. At the claim the beneficiary:4.2
  58. An insured dies while premiums were being waived under an approved disability claim. The death benefit will be:4.2
  59. A beneficiary receiving a large death benefit asks whether she must decide immediately how to use it. The agent should:4.2
  60. A beneficiary complains that the insurer has held a straightforward claim for several months. The agent should explain that:4.2
  61. Some months after a claim is settled, the agent contacts the surviving spouse. The appropriate purpose is to:4.2

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