LLQP Study - TNL
Barry and Sandra Smith have a 13 year old son, who already claims he wants to be a
professional stunt rider when he grows up. Barry and Sandra are quite serious when they
say they believe he will pursue his dream. Given Cameron's career aspirations and his
tendency to enjoy dangerous hobbies, the Smiths are concerned about his future insurability.
What would you recommend?
1 - They should estimate and project how much life insurance their son would require in
adulthood and purchase that amount of insurance today.
2 - They should purchase a stand alone GIB rider in their son's name.
3 - They should purchase 10-year term insurance with Cameron as the life-insured.
4 - They should purchase a small whole life policy that would provide sufficient insurance to
cover funeral costs with Cameron as the life insured and add a GIB rider.
Answer:
4 - They should purchase a small whole life policy that would provide sufficient insurance to
cover funeral costs with Cameron as the life insured and add a GIB rider.
Beatrice applied for a whole life policy and was told the annual premium would be $1,200.
Beatrice thought she may have difficulty coming up with a lump sum of $1,200 each year
and therefore would prefer to pay monthly premiums instead.
Which of the following is true regarding her monthly premium.
1 - It will be more than $100
2 - It will be less than $100
3 - It will be exactly $100
4 - It will definitely be equal to or less than $100 depending on interest rates at the beginning
of the policy year.
1 - It will be more than $100
,Landon is a relatively new insurance agent. Last month, he was at a conference where he
heard experts talk about the benefits of universal life (UL) insurance.
Which of the following clients would UL insurance be the least appropriate for?
1 - Elliot, a sophisticated investor who has sporadic income as a commissioned salesperson.
He needs insurance to take care of his physically challenged child in the event that the child
pre-deceases him.
2 - Kira, a conservative investor who has fully utilized her RRSP contributions and is looking
for ways to further shelter investment income and cover taxes on a cottage at death.
3 - Allan, a sophisticated investor who wants to have sufficient coverage to pay out his
mortgage in the event of premature death.
4 - Christian, who wants a life insurance policy that will provide the funds to donate a lump
sum to his favourite charity upon death.
3 - Allan, a sophisticated investor who wants to have sufficient coverage to pay out his
mortgage in the event of premature death.
Juan recently became disabled and is having a hard time making ends meet since he did not
have disability insurance. He is a few months behind on his mortgage payments and has no
other assets to call upon. After much consideration, he is thinking of surrendering his life
insurance policy since his wife and son passed away last year in a car accident. Given the
following information, which was last acquired in 1990:
Death benefit - $350,00
Premiums paid - $27,300
Net Cost of Pure Insurance - $8,000
Cash Surrender Value - $21,000
Dividends paid out to Julian - $0
How much would he receive after taxes if he surrendered the policy?
1 - $21,000
2 - $20.575
3 - $29,000
4 - $27,300
2 - $20.575
Big Insurance Co. recently implemented a fast-track underwriting department that will
underwrite all applications that meet certain criteria and can likely be approved quickly. All
other applications will be forwarded to the main underwriting department.
,Which of the following applications, if approved, is/are likely to be "rated" and therefore
should not be sent to the fast-track underwriting department?
I. Parker, who indicated on the application that he smokes one pack of cigarettes a day.
II. Antonia, who drinks wine at social events, resulting in her having an average of two drinks
per week.
III. Marcus, who has two driving convictions for running a red light and distracted driving due
to texting and driving.
IV. Julius who travels frequently because he has a passion for scuba diving.
1 - III, IV
2 - I, IV
3 - I only
4 - I, III, IV
1 - III, IV
What is not true of universal life insurance?
1 - It is the most flexible life insurance policy but also the most expensive.
2 - The plan holder can control the investment component of the plan.
3 - It has a fixed term and is used for temporary insurance needs.
4 - Income can be sheltered within a UL policy.
3 - It has a fixed term and is used for temporary insurance needs.
After completing a thorough needs analysis, you have determined that your clients need
$1,500,000 in permanent life insurance. You initially recommended a whole-life policy, but
the premium was too high for their budget.
You recommended the T-100, but the premium was still too high. What should you
recommend now?
1 - Universal life insurance
, 2 - A $1,500,000 five-year renewable term insurance policy with a convertible feature
3 - $750,000 in T-100 with an AD&D rider
4 - As much T-100 as they can currently afford
2 - A $1,500,000 five-year renewable term insurance policy with a convertible feature
Sam recently lost his job. He is two months behind on his mortgage payments, and is in
danger of having the bank foreclose his home. He has no other assets or credit facility to
draw upon and is thinking of surrendering his life insurance policy. This is a reasonable
strategy, given that his only dependent has pre-deceased him. Sam is interested in knowing
how much he would receive, net of taxes, if he were to surrender his policy.
Death benefit - $500,00
Premiums paid - $23,000
Net Cost of Pure Insurance - $9,000
Cash Surrender Value - $16,000
Dividends paid out to Sebastian - $1,000
Sebastian's marginal tax rate (MTR) 25%
If Sam surrenders the policy, how much will he receive after deducting the anticipated tax
liability?
1 - $15,250
2 - $7,615
3 - $16,250
4 - $14,250
1 - $15,250
Tyrone is having difficulty recalling the difference between YRT and LCOI within a UL policy.
Which of the following statements is true?
1 - LCOI is cheaper than YRT in the early years but more expensive in the later years
Barry and Sandra Smith have a 13 year old son, who already claims he wants to be a
professional stunt rider when he grows up. Barry and Sandra are quite serious when they
say they believe he will pursue his dream. Given Cameron's career aspirations and his
tendency to enjoy dangerous hobbies, the Smiths are concerned about his future insurability.
What would you recommend?
1 - They should estimate and project how much life insurance their son would require in
adulthood and purchase that amount of insurance today.
2 - They should purchase a stand alone GIB rider in their son's name.
3 - They should purchase 10-year term insurance with Cameron as the life-insured.
4 - They should purchase a small whole life policy that would provide sufficient insurance to
cover funeral costs with Cameron as the life insured and add a GIB rider.
Answer:
4 - They should purchase a small whole life policy that would provide sufficient insurance to
cover funeral costs with Cameron as the life insured and add a GIB rider.
Beatrice applied for a whole life policy and was told the annual premium would be $1,200.
Beatrice thought she may have difficulty coming up with a lump sum of $1,200 each year
and therefore would prefer to pay monthly premiums instead.
Which of the following is true regarding her monthly premium.
1 - It will be more than $100
2 - It will be less than $100
3 - It will be exactly $100
4 - It will definitely be equal to or less than $100 depending on interest rates at the beginning
of the policy year.
1 - It will be more than $100
,Landon is a relatively new insurance agent. Last month, he was at a conference where he
heard experts talk about the benefits of universal life (UL) insurance.
Which of the following clients would UL insurance be the least appropriate for?
1 - Elliot, a sophisticated investor who has sporadic income as a commissioned salesperson.
He needs insurance to take care of his physically challenged child in the event that the child
pre-deceases him.
2 - Kira, a conservative investor who has fully utilized her RRSP contributions and is looking
for ways to further shelter investment income and cover taxes on a cottage at death.
3 - Allan, a sophisticated investor who wants to have sufficient coverage to pay out his
mortgage in the event of premature death.
4 - Christian, who wants a life insurance policy that will provide the funds to donate a lump
sum to his favourite charity upon death.
3 - Allan, a sophisticated investor who wants to have sufficient coverage to pay out his
mortgage in the event of premature death.
Juan recently became disabled and is having a hard time making ends meet since he did not
have disability insurance. He is a few months behind on his mortgage payments and has no
other assets to call upon. After much consideration, he is thinking of surrendering his life
insurance policy since his wife and son passed away last year in a car accident. Given the
following information, which was last acquired in 1990:
Death benefit - $350,00
Premiums paid - $27,300
Net Cost of Pure Insurance - $8,000
Cash Surrender Value - $21,000
Dividends paid out to Julian - $0
How much would he receive after taxes if he surrendered the policy?
1 - $21,000
2 - $20.575
3 - $29,000
4 - $27,300
2 - $20.575
Big Insurance Co. recently implemented a fast-track underwriting department that will
underwrite all applications that meet certain criteria and can likely be approved quickly. All
other applications will be forwarded to the main underwriting department.
,Which of the following applications, if approved, is/are likely to be "rated" and therefore
should not be sent to the fast-track underwriting department?
I. Parker, who indicated on the application that he smokes one pack of cigarettes a day.
II. Antonia, who drinks wine at social events, resulting in her having an average of two drinks
per week.
III. Marcus, who has two driving convictions for running a red light and distracted driving due
to texting and driving.
IV. Julius who travels frequently because he has a passion for scuba diving.
1 - III, IV
2 - I, IV
3 - I only
4 - I, III, IV
1 - III, IV
What is not true of universal life insurance?
1 - It is the most flexible life insurance policy but also the most expensive.
2 - The plan holder can control the investment component of the plan.
3 - It has a fixed term and is used for temporary insurance needs.
4 - Income can be sheltered within a UL policy.
3 - It has a fixed term and is used for temporary insurance needs.
After completing a thorough needs analysis, you have determined that your clients need
$1,500,000 in permanent life insurance. You initially recommended a whole-life policy, but
the premium was too high for their budget.
You recommended the T-100, but the premium was still too high. What should you
recommend now?
1 - Universal life insurance
, 2 - A $1,500,000 five-year renewable term insurance policy with a convertible feature
3 - $750,000 in T-100 with an AD&D rider
4 - As much T-100 as they can currently afford
2 - A $1,500,000 five-year renewable term insurance policy with a convertible feature
Sam recently lost his job. He is two months behind on his mortgage payments, and is in
danger of having the bank foreclose his home. He has no other assets or credit facility to
draw upon and is thinking of surrendering his life insurance policy. This is a reasonable
strategy, given that his only dependent has pre-deceased him. Sam is interested in knowing
how much he would receive, net of taxes, if he were to surrender his policy.
Death benefit - $500,00
Premiums paid - $23,000
Net Cost of Pure Insurance - $9,000
Cash Surrender Value - $16,000
Dividends paid out to Sebastian - $1,000
Sebastian's marginal tax rate (MTR) 25%
If Sam surrenders the policy, how much will he receive after deducting the anticipated tax
liability?
1 - $15,250
2 - $7,615
3 - $16,250
4 - $14,250
1 - $15,250
Tyrone is having difficulty recalling the difference between YRT and LCOI within a UL policy.
Which of the following statements is true?
1 - LCOI is cheaper than YRT in the early years but more expensive in the later years
