Segregated Funds & Annuities MOCK EXAM 2024 with Complete Solutions!

Tax free savings account - ANSWER-Upon withdrawal from a ________, neither the principal deposit nor the income earned within the plan are treated as taxable income in the hands of the plan holder. Registered retirement income fund - ANSWER-The annual minimum ________withdrawals can be based on the age of the annuitant's spouse or common-law partner. The younger the age of the measuring life the lower the minimum withdrawal will be, leaving more funds to grow tax-deferred in the ________. 1. What is a disadvantage of owning a mutual fund? - ANSWER-Service fees impact the returns when investing for the long term 2. Ethan is a 24-year-old oil rig worker who has been saving to go to university for the past few years. Tuition for the first year is due next week and will be $18,000 including books. If tuition experiences 6% inflation, how much will Ethan need to have in his bank account now, to be able to pay for a four year degree? - ANSWER-$78,743 3. Marta is a young aggressive investor. She is looking for a segregated fund that has the potential to make her a lot of growth. Since she will not make any withdrawals until maturity, volatility is not a concern to her. Which is the best fund for her? - ANSWER-An index fund that tracks global emerging markets. 4. Which statement would be most useful in explaining to a client how mutual funds and segregated funds function? - ANSWER-Both segregated funds and mutual funds work on the pool concept. Professional fund managers monitor all investments closely. 5. Melanie is 62 years old. She is considering investing in a product which her agent identifies as having a guaranteed minimum withdrawal benefit. Which normal advantage of a segregated fund contract will she lose if she wishes to take full advantage of the features associated with the guaranteed minimum withdrawal benefit (GMWB)? - ANSWER-Liquidity. 6. Which of the following investments presents the investor with the least risk? - ANSWER-Treasury Bills. (T-Bills) 7. Joshua has purchased an Individual Variable Insurance Contract (IVIC) featuring a Guaranteed Lifetime Withdrawal Benefit (GLWB). In the first year of guaranteed income, Joshua's income was $12,200, or 5% of the value of the contract. This was the guaranteed amount. At the same time, Joshua's investment returns were 7% and his management fees represented 4% of the value of the fund. What will the consequences be for Joshua's income in the future? - ANSWER-His income will remain at least $12,200. 8. Ash passes away in a car accident. He had a segregated fund with an 80% maturity guarantee and an 80% death benefit guarantee. Ash's deposits totaled $5,600. The insurer paid a guaranteed top-up of $1,480 to the annuitant. What is the market value of the segregated fund at Ash's death? - ANSWER-$3,000 Calculations $5,600 x 0.80 = $4,480 - $1,480 = $3,000 9. Janice has a segregated fund that she originally paid a premium of $150,000, she paid the premium and signed the contract on March 4th, 2012. Her contract included a 75% guarantee at death and maturity with a 10-year maturity date. Janice has selected a stock market account investing in Canadian equities. The Insurance company that she is dealing with recently experienced some financial difficulties related to severe market losses. Melania, a life insurance agent is meeting with her in early March 2020 at a time when the markets are at their all time low. The headlines today are that the insurance company that Janice is dealing with has become insolvent and have lost their charter to con