TNL - LLQP PRACTICE EXAM :
ETHICS QUESTIONS WITH
COMPLETE SOLUTIONS
Lisa is a new life insurance agent studying the requirements for ascertaining the
client's identity under the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act and Financial Transactions and Reports Analysis Centre of Canada
(FINTRAC) guideline 6A.
For which of the following products must agents ascertain the client's identity?
1. Immediate annuity and deferred annuity
2. Exempt life insurance policy and TFSA
3. Deferred annuity and exempt life insurance policy
4. Deferred annuity and TFSA - ANSWER1. Immediate annuity and deferred annuity
Tony and Anna have been common law partners for the last 15 years. Tony moved
into Anna's home 10 years ago and has been contributing to the mortgage and other
household bills. He and Anna have two children. Tony spent four years at home with
the kids and went back to work last year. Anna has continued to work throughout
and is the main contributor to their expenses. Tony and Mellie separate. As
common-law partners, to which of the following does Tony have the right?
1. Tony has the right to property division because she has been contributing to the
mortgage and household bills
2. Tony can seek spousal support because Anna's income supports her
3. Tony has all the same rights as someone in a married couple
4. Tony can have Anna sign a cohabitation agreement when they separate to retain
her spousal and property rights. - ANSWER2. Tony can seek spousal support
because Anna's income supports her.
Gary offers to add a term rider free of charge if he buys a permanent life insurance
policy.
Which prohibited sales practice is Gary using?
1. Inducing to insure
2. Trafficking in insurance
3. Premium rebating
4. Churning - ANSWER1. Inducing to insure
Alberto is a licensed life insurance agent and he has a deal with his friend Karen, a
real estate agent, that he gives her a portion of his commission for any sale he
makes to one of the many clients she refers.
This arrangement is known as which of the following?
,1. Inducing to insure.
2. Premium rebating.
3. Referral arrangement.
4. Commission sharing. - ANSWER4. Commission sharing.
Sue purchased a life insurance policy on her son Billy's life for a face amount of
$300,000. She named her husband Roy, Billy's father, as the successor policyholder.
She named Billy's sister, Sally as the beneficiary of the policy. When Billy reached
the age of majority, Sue made an absolute assignment of the policy to him. Billy did
nothing about the policy and died a few months later in a boating accident.
Who received the benefit of the policy?
1. Sue, the former owner
2. Roy, the former successor policyholder
3. Sally, the former beneficiary
4. Billy's estate - ANSWER4. Billy's estate
Jenn recently purchased an insurance policy that pays on her husband Sheldon's
life. The benefit is payable to their son Howard. Jenn also noted on the policy that if
she were to pre-decease Sheldon, the policy should transfer to her sister, Shawna.
Which of the following concerning this situation is correct?
1. Jenn is the life insured.
2. Howard is the contingent beneficiary.
3. Shawna is the successor policyholder.
4. Sheldon is the trustee. - ANSWER3. Shawna is the successor policyholder.
Dillon is a member of his employer's group insurance which includes disability
coverage. Dillon has some questions with regard to this policy and its provisions.
Which of the following is correct?
1. Dillon's disability benefits will cover him from work-related injury or disability.
2. A claim made by Dillon must satisfy the definition of disability set out in his
province's insurance legislation.
3. Detailed medical evidence from a physician may be necessary to substantiate a
claim.
4. Disability insurance provides coverage from disability arising only from physical
impairment resulting in the inability to work. - ANSWER2. A claim made by Dillon
must satisfy the definition of disability set out in his provinces insurance legislation.
Tanya is an insurance agent and has brokered for her client Johnny to sell his
insurance contract to an unrelated third party.
This practice is best referred to as which of the following?
1. Fronting
2. Inducing
, 3. Trafficking
4. Twisting - ANSWER3. Trafficking
Frank is a new life insurance agent. He wants to know which of the following is a
professional association and not a regulating authority.
What do you tell Frank?
1. Canadian Insurance Services Regulatory Organizations (CISRO)
2. Advocis
3. Canadian Life and Health Insurance Association (CLHIA)
4. Canadian Council of Insurance Regulators (CCIR) - ANSWER3. Canadian Life
and Health Insurance Association (CLHIA)
Laslo owns an accidental death and dismemberment policy in the amount of
$100,000. His daughter Suzie as the beneficiary. Laslo is hurt in a serious accident
and as a result, loses two of his limbs.
Who receives the benefit from the accidental death and dismemberment policy?
1. Laslo's heirs
2. Suzie
3. Laslo
4. Laslo's estate - ANSWER3. Suzie
Brian owns a permanent life insurance policy on his own life. The policy has a CSV
of $200,000 and an ACB of $100,000. He decides he needs $150,000. After the
transaction, he is told that he will have to include $50,000 taxable policy gains in his
income for this year and pay tax on it.
What transaction has Brian undertaken?
1. Collateral loan
2. Policy loan
3. Partial surrender
4. Withdrawal - ANSWER2. Policy loan
The ability for an individual to provide valid consent to enter into a contract is the
concept which can be best referred to as one's?
1. Legal capacity.
2. Lawful status.
3. Power of attorney.
4. Legal representation. - ANSWER1. Legal capacity.
Amanda, a new client, asks her agent about regulations in the insurance industry.
Amanda wants to know specifically whether there is an inter-jurisdictional agency to
facilitate and promote an efficient and effective regulatory system in Canada to serve
the public interest.
ETHICS QUESTIONS WITH
COMPLETE SOLUTIONS
Lisa is a new life insurance agent studying the requirements for ascertaining the
client's identity under the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act and Financial Transactions and Reports Analysis Centre of Canada
(FINTRAC) guideline 6A.
For which of the following products must agents ascertain the client's identity?
1. Immediate annuity and deferred annuity
2. Exempt life insurance policy and TFSA
3. Deferred annuity and exempt life insurance policy
4. Deferred annuity and TFSA - ANSWER1. Immediate annuity and deferred annuity
Tony and Anna have been common law partners for the last 15 years. Tony moved
into Anna's home 10 years ago and has been contributing to the mortgage and other
household bills. He and Anna have two children. Tony spent four years at home with
the kids and went back to work last year. Anna has continued to work throughout
and is the main contributor to their expenses. Tony and Mellie separate. As
common-law partners, to which of the following does Tony have the right?
1. Tony has the right to property division because she has been contributing to the
mortgage and household bills
2. Tony can seek spousal support because Anna's income supports her
3. Tony has all the same rights as someone in a married couple
4. Tony can have Anna sign a cohabitation agreement when they separate to retain
her spousal and property rights. - ANSWER2. Tony can seek spousal support
because Anna's income supports her.
Gary offers to add a term rider free of charge if he buys a permanent life insurance
policy.
Which prohibited sales practice is Gary using?
1. Inducing to insure
2. Trafficking in insurance
3. Premium rebating
4. Churning - ANSWER1. Inducing to insure
Alberto is a licensed life insurance agent and he has a deal with his friend Karen, a
real estate agent, that he gives her a portion of his commission for any sale he
makes to one of the many clients she refers.
This arrangement is known as which of the following?
,1. Inducing to insure.
2. Premium rebating.
3. Referral arrangement.
4. Commission sharing. - ANSWER4. Commission sharing.
Sue purchased a life insurance policy on her son Billy's life for a face amount of
$300,000. She named her husband Roy, Billy's father, as the successor policyholder.
She named Billy's sister, Sally as the beneficiary of the policy. When Billy reached
the age of majority, Sue made an absolute assignment of the policy to him. Billy did
nothing about the policy and died a few months later in a boating accident.
Who received the benefit of the policy?
1. Sue, the former owner
2. Roy, the former successor policyholder
3. Sally, the former beneficiary
4. Billy's estate - ANSWER4. Billy's estate
Jenn recently purchased an insurance policy that pays on her husband Sheldon's
life. The benefit is payable to their son Howard. Jenn also noted on the policy that if
she were to pre-decease Sheldon, the policy should transfer to her sister, Shawna.
Which of the following concerning this situation is correct?
1. Jenn is the life insured.
2. Howard is the contingent beneficiary.
3. Shawna is the successor policyholder.
4. Sheldon is the trustee. - ANSWER3. Shawna is the successor policyholder.
Dillon is a member of his employer's group insurance which includes disability
coverage. Dillon has some questions with regard to this policy and its provisions.
Which of the following is correct?
1. Dillon's disability benefits will cover him from work-related injury or disability.
2. A claim made by Dillon must satisfy the definition of disability set out in his
province's insurance legislation.
3. Detailed medical evidence from a physician may be necessary to substantiate a
claim.
4. Disability insurance provides coverage from disability arising only from physical
impairment resulting in the inability to work. - ANSWER2. A claim made by Dillon
must satisfy the definition of disability set out in his provinces insurance legislation.
Tanya is an insurance agent and has brokered for her client Johnny to sell his
insurance contract to an unrelated third party.
This practice is best referred to as which of the following?
1. Fronting
2. Inducing
, 3. Trafficking
4. Twisting - ANSWER3. Trafficking
Frank is a new life insurance agent. He wants to know which of the following is a
professional association and not a regulating authority.
What do you tell Frank?
1. Canadian Insurance Services Regulatory Organizations (CISRO)
2. Advocis
3. Canadian Life and Health Insurance Association (CLHIA)
4. Canadian Council of Insurance Regulators (CCIR) - ANSWER3. Canadian Life
and Health Insurance Association (CLHIA)
Laslo owns an accidental death and dismemberment policy in the amount of
$100,000. His daughter Suzie as the beneficiary. Laslo is hurt in a serious accident
and as a result, loses two of his limbs.
Who receives the benefit from the accidental death and dismemberment policy?
1. Laslo's heirs
2. Suzie
3. Laslo
4. Laslo's estate - ANSWER3. Suzie
Brian owns a permanent life insurance policy on his own life. The policy has a CSV
of $200,000 and an ACB of $100,000. He decides he needs $150,000. After the
transaction, he is told that he will have to include $50,000 taxable policy gains in his
income for this year and pay tax on it.
What transaction has Brian undertaken?
1. Collateral loan
2. Policy loan
3. Partial surrender
4. Withdrawal - ANSWER2. Policy loan
The ability for an individual to provide valid consent to enter into a contract is the
concept which can be best referred to as one's?
1. Legal capacity.
2. Lawful status.
3. Power of attorney.
4. Legal representation. - ANSWER1. Legal capacity.
Amanda, a new client, asks her agent about regulations in the insurance industry.
Amanda wants to know specifically whether there is an inter-jurisdictional agency to
facilitate and promote an efficient and effective regulatory system in Canada to serve
the public interest.
