ETHICS EXAM WITH CORRECT ANSWERS
Question 1
Suzanne, a life insurance agent, has asked her assistant Rosy, who is not yet
licensed, to telephone people to schedule meetings with Suzanne to discuss
their insurance needs. She intends to contact people who attended the same
school as she and Suzanne using an alumni directory. Suzanne has registered
and subscribed to the National Do Not Call List (DNCL).
What should Suzanne tell Rosy?
a) Calls to people with shared backgrounds are exempt from the DNCL.
b) As Suzanne has registered and subscribed to the DNCL, Rosy can solicit
insurance from
anyone listed in the alumni directory.
c) Rosy should restrict her calls to businesses and schedule meetings with
Suzanne to
discuss group insurance.
d) Rosy should email anyone she cannot reach by telephone offering
meetings with
Suzanne to discuss their insurance needs; emails are exempt from DNCL. -
ANSWER-Correct answer: c)
Explanations
Answer a: False. There is no exemption from the DNLC for calling people with
shared backgrounds. Rosy cannot call anyone on the list.
Answer b: False. Rosy is not yet licensed; she cannot solicit insurance.
,Answer c: Correct answer. Calls to businesses are not prohibited.
Answer d: False. Canadian anti-spam legislation prohibits the sending of
commercial electronic messages if the sender does not first have the
recipient's consent.
References
Reference manual: Ethics and professional practice, 2 Edition, 2015, sections
1.1.7, 1.6.3 and 1.6.4
Evaluated competency sub-component in Curriculum: 1.1. Delimit the legal
framework
governing life insurance
Question 2
When Karen and Jim were newly married, they decided after meeting with a
life insurance advisor that they should take out a joint life insurance policy
with $350,000 on each of their lives to cover the cost of their mortgage,
naming each other as beneficiaries. Jim became the sole owner of the policy.
They were happy they took out the insurance when they did because a few
years later Karen developed type 1 diabetes.
After 10 years of marriage Karen and Jim went through a bitter divorce,
selling the house and going their separate ways. Jim had even moved to
another province and both Karen and the agent had lost all contact with him.
After the divorce Karen met with the agent to request a change to the policy
in naming a new beneficiary on her life.
What course of action should the agent take?
a) The agent should contact the insurance company, explain the situation
and request the beneficiary change be ma - ANSWER-Correct answer: c)
,Explanations
Jim is the sole policy owner or policyholder and consequently is the individual
or legal person who has legal ownership of the policy and exercises the
contractual and statutory rights that go with being the owner. The
policyholder may change a beneficiary using a beneficiary
designation/change form issued by the insurer, unless the existing
designation is irrevocable.
References
Reference manual: Ethics and professional practice, 2 Edition, 2015, sections
2.1.2 and 2.1.4 Evaluated competency sub-component in Curriculum: 1.2.
Characterize the parties involved in the contract
Question 3
On May 1st, Anne meets with her insurance agent, Greg, and decides to
apply for a term life policy. She completes the application and declines the
temporary insurance agreement, requesting instead "cash on delivery," as
she already has some coverage in force under another contract.
On May 16th, Greg is advised by his head office that Anne's application has
been approved. On May 20th, Greg delivers the policy to Anne and she
confirms her banking information with him so that she can begin her monthly
premium payments as of May 25th.
When is Anne's new policy deemed to be in force?
a) Anne's policy is in force as of May 1st, the date of her application.
b) Anne's policy is in force as of May 16th, the date she was approved for
coverage.
c) Anne's policy is in force as of May 20th, the date it is delivered to her and
she accepts it.
, d) Anne's policy is in force as of May 25th, the date the first month's pre -
ANSWER-Correct answer: d)
Explanations
Answer a: False. The application form is only the first part of the process. It
must be reviewed
by an underwriter after which the insurer may make an offer to insure.
Answer b: False. Following the approval for coverage, the policy must be
delivered and the agent must determine if there has been a change in
insurability between the date of the application and policy delivery date.
Consequently, the policy could not be in force the day Anne was approved
for coverage.
Answer c: False. Although the policy was delivered to Anne and accepted on
May 20th, she did not pay the first month's premium on that date and
therefore the policy could not take effect on that date.
Answer d: Correct answer. The policy can only take effect when it is
delivered, accepted and the first month's premium is received, in this case
May 25th.
References
Relevant section of exam preparation manual: Ethics and professional
practice, 2 Edition,
2015, section 2.2.1.5
Evaluated competency sub-component in Curriculum: 1.3. Contextualize the
rules relating to the contract's formation, taking effect, reinstatement and
termination
Question 4
Question 1
Suzanne, a life insurance agent, has asked her assistant Rosy, who is not yet
licensed, to telephone people to schedule meetings with Suzanne to discuss
their insurance needs. She intends to contact people who attended the same
school as she and Suzanne using an alumni directory. Suzanne has registered
and subscribed to the National Do Not Call List (DNCL).
What should Suzanne tell Rosy?
a) Calls to people with shared backgrounds are exempt from the DNCL.
b) As Suzanne has registered and subscribed to the DNCL, Rosy can solicit
insurance from
anyone listed in the alumni directory.
c) Rosy should restrict her calls to businesses and schedule meetings with
Suzanne to
discuss group insurance.
d) Rosy should email anyone she cannot reach by telephone offering
meetings with
Suzanne to discuss their insurance needs; emails are exempt from DNCL. -
ANSWER-Correct answer: c)
Explanations
Answer a: False. There is no exemption from the DNLC for calling people with
shared backgrounds. Rosy cannot call anyone on the list.
Answer b: False. Rosy is not yet licensed; she cannot solicit insurance.
,Answer c: Correct answer. Calls to businesses are not prohibited.
Answer d: False. Canadian anti-spam legislation prohibits the sending of
commercial electronic messages if the sender does not first have the
recipient's consent.
References
Reference manual: Ethics and professional practice, 2 Edition, 2015, sections
1.1.7, 1.6.3 and 1.6.4
Evaluated competency sub-component in Curriculum: 1.1. Delimit the legal
framework
governing life insurance
Question 2
When Karen and Jim were newly married, they decided after meeting with a
life insurance advisor that they should take out a joint life insurance policy
with $350,000 on each of their lives to cover the cost of their mortgage,
naming each other as beneficiaries. Jim became the sole owner of the policy.
They were happy they took out the insurance when they did because a few
years later Karen developed type 1 diabetes.
After 10 years of marriage Karen and Jim went through a bitter divorce,
selling the house and going their separate ways. Jim had even moved to
another province and both Karen and the agent had lost all contact with him.
After the divorce Karen met with the agent to request a change to the policy
in naming a new beneficiary on her life.
What course of action should the agent take?
a) The agent should contact the insurance company, explain the situation
and request the beneficiary change be ma - ANSWER-Correct answer: c)
,Explanations
Jim is the sole policy owner or policyholder and consequently is the individual
or legal person who has legal ownership of the policy and exercises the
contractual and statutory rights that go with being the owner. The
policyholder may change a beneficiary using a beneficiary
designation/change form issued by the insurer, unless the existing
designation is irrevocable.
References
Reference manual: Ethics and professional practice, 2 Edition, 2015, sections
2.1.2 and 2.1.4 Evaluated competency sub-component in Curriculum: 1.2.
Characterize the parties involved in the contract
Question 3
On May 1st, Anne meets with her insurance agent, Greg, and decides to
apply for a term life policy. She completes the application and declines the
temporary insurance agreement, requesting instead "cash on delivery," as
she already has some coverage in force under another contract.
On May 16th, Greg is advised by his head office that Anne's application has
been approved. On May 20th, Greg delivers the policy to Anne and she
confirms her banking information with him so that she can begin her monthly
premium payments as of May 25th.
When is Anne's new policy deemed to be in force?
a) Anne's policy is in force as of May 1st, the date of her application.
b) Anne's policy is in force as of May 16th, the date she was approved for
coverage.
c) Anne's policy is in force as of May 20th, the date it is delivered to her and
she accepts it.
, d) Anne's policy is in force as of May 25th, the date the first month's pre -
ANSWER-Correct answer: d)
Explanations
Answer a: False. The application form is only the first part of the process. It
must be reviewed
by an underwriter after which the insurer may make an offer to insure.
Answer b: False. Following the approval for coverage, the policy must be
delivered and the agent must determine if there has been a change in
insurability between the date of the application and policy delivery date.
Consequently, the policy could not be in force the day Anne was approved
for coverage.
Answer c: False. Although the policy was delivered to Anne and accepted on
May 20th, she did not pay the first month's premium on that date and
therefore the policy could not take effect on that date.
Answer d: Correct answer. The policy can only take effect when it is
delivered, accepted and the first month's premium is received, in this case
May 25th.
References
Relevant section of exam preparation manual: Ethics and professional
practice, 2 Edition,
2015, section 2.2.1.5
Evaluated competency sub-component in Curriculum: 1.3. Contextualize the
rules relating to the contract's formation, taking effect, reinstatement and
termination
Question 4
