Life License Qualification Program (LLQP) (LLQP) Free Practice Test

Question 1

Life insurance agent Alexandra completes a life insurance application with her client, Joshua. After three months in underwriting, the application is accepted and the policy is issued on a standard rate. Alexandra goes to deliver the policy. When she gets to Joshua's, he tells her how he just got out of the hospital with a serious blood clot.
What should Alexandra do?

A. Simply deliver the policy to Joshua, as his application has already been accepted.

B. Deliver the policy to Joshua, but notify the underwriter of the new medical information.

C. Tell Joshua that, because of the new medical information, she cannot deliver the policy and must put an end to the entire application process.

D. Tell Joshua that, because of the new medical information, she cannot deliver the policy and must notify the underwriter for further consideration.

Correct Answer: D

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Question 2

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?

A. Whole life with GIB rider

B. Universal life with YRT with maximum funding option

C. Whole life with PUA rider

D. Universal life with LCOI with minimum funding option

Correct Answer: C

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Question 3

(Suzie began her career with a large law firm five years ago. She earns an excellent income and saves
$5,000 annually through a financial advisor. Her advisor placed her in a conservative fund within a TFSA. Suzie wanted to save for retirement and maximize tax deductions.
Based on this information, what conclusion can be drawn about Suzie's savings program?)

A. It is not adequate: it should be better protected from potential creditors.

B. It is adequate.

C. It is not adequate: an RRSP would have been better than a TFSA.

D. It is not adequate: it should at least be better diversified.

Correct Answer: C

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Question 4

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

A. Life annuity with a 20-year guaranteed period.

B. Impaired life annuity.

C. Term annuity to age 90.

D. Life annuity.

Correct Answer: B

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Question 5

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

A. It will be payable to Dominic's estate.

B. Dominic's estate will receive a return of premiums.

C. It will not be paid.

D. It will be paid to Dominic's next of kin.

Correct Answer: C

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Question 6

Marc, age 35, is a self-employed electrician. His annual income is approximately $60,000. His spouse Veronique works part-time and earns an annual income of $15,000. Marc and Veronique are parents of two young children. Their monthly financial obligations with regard to rent, car, clothing, and food amount to
$3,000. What accident and sickness insurance protection do Marc and Veronique primarily need?

A. Disability coverage of $3,000 per month for Veronique.

B. Disability coverage of $4,000 per month for Marc.

C. Disability coverage of $3,000 per month for Marc.

D. Long-term care insurance of $3,000 per month for Marc.

Correct Answer: C

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Question 7

Abraham lives in Alberta. He meets with a life insurance agent to discuss the purchase of an individual extended health insurance plan. Abraham is interested in a plan that would cover him, his wife, and their two young children. Here are some of the features of the plan that most closely meets Abraham's needs:
prescription drug coverage with a $50 annual deductible and 80% co-insurance, and dental coverage with a
$100 deductible and 70% co-insurance on preventative services. However, Abraham asks the agent to present a plan with a cheaper premium. What changes would the agent have to consider in order to present a plan with a lower premium than the one described above?

A. Lower deductible on prescription drug coverage, higher deductible on preventative dental services.

B. Higher deductible and lower co-insurance on prescription drugs, lower deductible and lower co- insurance on preventative dental services.

C. Lower deductible and higher co-insurance on prescription drugs, lower deductible and higher co- insurance on preventative dental services.

D. Higher deductible and lower co-insurance on prescription drugs, higher deductible and lower co- insurance on preventative dental services.

Correct Answer: D

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Question 8

Coraline is a landscape gardener who owns a disability insurance (DI) policy. The policy will pay her a
$3,000 monthly benefit after a 90-day waiting period. She is diagnosed with cancer, and because she has to undergo months of chemotherapy, she will be unable to work. She calls Robin, her insurance agent, to inform him of her diagnosis. She would like to know more information about the claims process.
Which of the following statements is CORRECT?

A. The insurer must pay Coraline the benefit amount within 30 days after receipt of the proof of loss.

B. Coraline has 30 days to provide the insurer with all of the information required to process the claim.

C. Coraline must contact her agent by phone within 30 days of learning about her diagnosis.

D. The payment of the initial benefit to Coraline must occur within 30 days after the end of the waiting period.

Correct Answer: A

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Question 9

Natalie and Ted, who are both 40, meet with an insurance agent to discuss their life insurance needs. They have four major concerns. Their first concern is that Natalie is the primary income earner: if something happened to her, Ted would not be able to provide their two young children with the life they are accustomed to. Their second concern is that if something were to happen to Ted, Natalie would have to pay for childcare.
The third issue is that they want to make sure the mortgage on their primary residence is paid off in the event something happened to either of them. Lastly, Natalie is concerned about the tax liability on the family cottage when it gets passed on to the kids. The family cottage is fully paid. The agent notes that most of the couple's concerns could be addressed with term life insurance products.
Which of their concerns can only be addressed with a permanent life insurance product?

A. Paying off the mortgage.

B. Paying for childcare.

C. Replacing Natalie's income.

D. Covering the tax liability on the family cottage.

Correct Answer: D

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Question 10

Goran and Tanja married two years ago. Last year, they purchased and moved into a three-bedroom house in the suburbs. The current balance on their mortgage is $655,000. They meet with Ljubomir, an insurance agent, to purchase a joint term life insurance policy to cover the mortgage. When Ljubomir asks about their existing coverage, Goran shares that he has none. Tanja explains that she owns a universal life (UL) policy with a level death benefit of $50,000 and a cash surrender value (CSV) of $5,000, purchased 6 years ago from another agent. Tanja would like to surrender her UL policy and use the $5,000 CSV to pay for a trip to Europe. What additional information about Tanja's UL policy does Ljubomir need to collect?

A. The dividends and paid-up additions.

B. The adjusted cost basis (ACB) and surrender charges of the policy's CSV.

C. The premiums upon renewal.

D. The investment vehicle of the policy's CSV.

Correct Answer: B

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Question 11

Juliette owns a medium-sized business with approximately 100 employees. Three years ago, she set up a small group benefits plan. Her employees, however, are unhappy with the coverages offered under the plan.
Moreover, for tax purposes, the group plan shares the cost of disability premiums with the employees-an expense they do not welcome. What should Juliette's agent tell her?

A. The existing group plan is the most cost-effective and tax-free way to provide these benefits.

B. She should instead opt for an EHT, which affords more flexibility with no tax implications for her employees.

C. She should instead opt for a PHSP, which provides more flexible and tax-free disability benefits.

D. Her existing group plan is the best solution, because a group of that size would not be able to take advantage of other "grouped" alternatives.

Correct Answer: C

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Question 12

Anita is a 50-year-old woman who is thinking of purchasing a $150,000 permanent life insurance policy to pay for the capital gains tax that will be payable on her country home upon her death. She had purchased the home twelve years ago and wants to bequeath the property to her niece when she dies.
Which of the following features about a permanent insurance policy is TRUE?

A. Anita must contact the insurer if there is a change in the insurability.

B. The premiums will remain level for the duration of the contract.

C. The coverage ends when Anita turns 100.

D. The policy cannot be cancelled by Anita.

Correct Answer: B

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Question 13

Becky opened a small bakery five years ago. Although she struggled at first, her business hasbecome increasingly successful. Until recently, she only had two full-time employees, but now she hired two more and relocated the store to a busier street. The rent is higher, and so are the profits. As the bakery expands, however, Becky is becoming increasingly concerned about what would happen to it if she became unable to work-even for just a few months-due to an illness or an injury. Which one of the following options would most suitably protect Becky's business against such a risk?

A. Personal disability insurance.

B. Disability buyout insurance.

C. Business overhead expense insurance.

D. Self-funding arrangement.

Correct Answer: C

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Question 14

Samya and Gary, who are both insurance representatives, are having lunch together. Gary has been very successful for several years and proposes a scheme to Samya to get insurance proposals signed for a fictional company they would create together. He believes that this system would make them millionaires in about ten years. Gary advises Samya to keep their conversation a secret. If Samya agrees to Gary's proposal, what sanctions could she face?

A. Pursuant to the Criminal Code, sanctions could go as far as imprisonment

B. A sanction from the CSF's discipline committee that could be a fine, suspension, or both

C. Pursuant to the Distribution Act, penal proceedings with the Court of Quebec could result in a fine of up to $1,000,000

D. Since liability insurance protects the consumer, the clients' losses will be covered and thesanctions will be reduced based on real harm

Correct Answer: A

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Question 15

Eloise has critical illness coverage through her group insurance plan at work. She is 54 years old, in excellent health, and is planning to retire soon. She meets with Sonia, her insurance agent, to plan her retirement and to make sure she will still be covered in the event of critical illness. To make sure she is not a burden on her family, Eloise would also like to receive monthly benefits in the event she is placed in an assisted living facility. What should Sonia tell her?

A. That the critical illness coverage under her group plan will end when she retires and that she should consider purchasing individual coverage.

B. That the critical illness coverage under her group plan is the least expensive and that the insurer will have to give her the option of converting it into individual insurance when she retires.

C. That when she retires, she should purchase individual disability insurance, which would give herthe coverage required in the event of critical illness.

D. That her critical illness coverage will end when she retires and that she should consider purchasing individual critical illness and long-term care insurance.

Correct Answer: D

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