seg funds mock olivers
questions and answers
Luke will turn 70 years old this year. He retired two years ago, after a 35-year
career at a large Canadian manufacturer. His wife died around the same time
and he has been living off the life insurance benefit he received as a result of
her passing, so he has not touched the savings in his Registered Retirement
Savings Plan (RRSP), nor has he started receiving any government pension.
Which among the following income sources will Luke start to receive this
year?
a) Tax-Free Savings Account (TFSA) holdings
b) Canada Pension Plan (CPP)
c) Life Income Fund (LIF)
d) Registered Retirement Income Fund (RRIF)
YOUR ANSWER - answer Canada Pension Plan (CPP)
Rationale:
Individuals can defer their CPP and OAS benefits but must start receiving
them by age 70. They do not need to convert their RRSP to a RRIF before the
year they turn 71. (Refer to Sections 4.4.1.3, 4.4.2)
Telma is a single mother of two children aged 4 and 7. She meets with her
financial advisor to gather some information about RESP contributions to
save for her children's education. Which of the following information provided
by the advisor is true?
a) Savings grow tax-deferred and contributions are not tax-deductible.
b) If the RESP is a family plan, the lifetime contribution limit per beneficiary
is $100,000.
c) A family RESP plan can only have three beneficiaries, and the beneficiaries
need not be related to the subscriber.
,d) All RESP beneficiaries receive Educational Assistance Payments (EAPs)
which are taxable to the subscriber. - answer Savings in an RESP account
grow tax-deferred and contributions are not tax-deductible. There is a
lifetime contribution limit per beneficiary of $50,000, regardless of whether
the RESP is an individual or family plan. A family plan can have more than
one beneficiary and each beneficiary must be related to the subscriber. An
RESP beneficiary (i.e., the student) receives withdrawals from the plan as
Educational Assistance Payments (EAPs). EAPs are paid only when the
student is enrolled in a qualifying educational program. Withdrawals are
taxed in the hands of the beneficiary. Since most students have very little
income, the EAPs are usually tax-free.Ref: 4.7.4
Lena is planning to invest in a type of segregated funds called income funds
and she asks her insurance agent to provide her with some information
related to income funds. Her insurance agent is likely to mention that income
funds are:
a) based on bonds.
b) restricted to bonds.
c) high-risk funds.
d) based on stocks. - answer Income funds are based on bonds, and growth
is derived by the regular interest income the bonds pay and their possibility
for capital appreciation. Income funds are not restricted to bonds and some
may also hold high-quality stocks. Income funds are a lower-risk fund.Ref:
2.2.4
Jeffrey used $155,000 of his inheritance to purchase an Individual Variable
Insurance Contract with M & J Insurance Co. The maturity on the contract
was a deposit-based guarantee of 75%. Ten years later, the contract was
worth $245,365.
Not including fees and charges owed, how much will Jeffrey receive at
maturity?
a) $245,365
b) $128,898.75
c) $0
, d) $184,023.75 - answer Jeffrey will receive $245,365 on the maturity of the
contract. The guarantee is $245,365 × 75% = $184,023.75, however that is
the minimum as the investor receives the greater of the maturity guarantee
or the market value of the fund. (Refer to Section 1.3.1.4)
Theo is 60 years old and is planning to retire this year. He will start receiving
his retirement pension after he turns 65. He has $120,000 in savings, which
he would like to invest in a way that provides him with guaranteed monthly
income until his pension payments begins. Which of the following is a
suitable recommendation for Theo?
a) A 5-year term annuity contract
b) A segregated fund investment with guaranteed lifetime withdrawal benefit
c) A segregated fund investment with guaranteed minimum withdrawal
benefit
d) A single-life deferred annuity contract - answer A 5-year term annuity is a
suitable recommendation for Theo to provide him with temporary income
unitl his pension payments begin in 5 years.A term annuity provides an
income to an annuitant for the term of time stated in the contract. The
payment period may be as short as a few years or may last for decades. A
term annuity is useful to bridge income between two dates, such as between
the time when an employee takes an early retirement and the time when he
starts to receive his pension.
Marcin is in his late 70s and meets with his insurance agent, Anton, with
whom he had purchased several insurance products. Marcin's health is
declining and he informs Anton that he would like to name him as his power
of attorney. How should Anton respond to Marcin's request?
a) He should decline being named as Marcin's power of attorney.
b) He should decline the request only if there is no remuneration.
c) He should accept Marcin's request but inform his direct supervisor about
it.
d) He should accept Marcin's request and keep it confidential. - answer He
should decline being named as Marcin's power of attorney.
Rationale:An agent should decline being named as an attorney and must
exercise caution when confronted with dealing with an attorney for property.
The attorney has many powers for dealing with the individual's property
questions and answers
Luke will turn 70 years old this year. He retired two years ago, after a 35-year
career at a large Canadian manufacturer. His wife died around the same time
and he has been living off the life insurance benefit he received as a result of
her passing, so he has not touched the savings in his Registered Retirement
Savings Plan (RRSP), nor has he started receiving any government pension.
Which among the following income sources will Luke start to receive this
year?
a) Tax-Free Savings Account (TFSA) holdings
b) Canada Pension Plan (CPP)
c) Life Income Fund (LIF)
d) Registered Retirement Income Fund (RRIF)
YOUR ANSWER - answer Canada Pension Plan (CPP)
Rationale:
Individuals can defer their CPP and OAS benefits but must start receiving
them by age 70. They do not need to convert their RRSP to a RRIF before the
year they turn 71. (Refer to Sections 4.4.1.3, 4.4.2)
Telma is a single mother of two children aged 4 and 7. She meets with her
financial advisor to gather some information about RESP contributions to
save for her children's education. Which of the following information provided
by the advisor is true?
a) Savings grow tax-deferred and contributions are not tax-deductible.
b) If the RESP is a family plan, the lifetime contribution limit per beneficiary
is $100,000.
c) A family RESP plan can only have three beneficiaries, and the beneficiaries
need not be related to the subscriber.
,d) All RESP beneficiaries receive Educational Assistance Payments (EAPs)
which are taxable to the subscriber. - answer Savings in an RESP account
grow tax-deferred and contributions are not tax-deductible. There is a
lifetime contribution limit per beneficiary of $50,000, regardless of whether
the RESP is an individual or family plan. A family plan can have more than
one beneficiary and each beneficiary must be related to the subscriber. An
RESP beneficiary (i.e., the student) receives withdrawals from the plan as
Educational Assistance Payments (EAPs). EAPs are paid only when the
student is enrolled in a qualifying educational program. Withdrawals are
taxed in the hands of the beneficiary. Since most students have very little
income, the EAPs are usually tax-free.Ref: 4.7.4
Lena is planning to invest in a type of segregated funds called income funds
and she asks her insurance agent to provide her with some information
related to income funds. Her insurance agent is likely to mention that income
funds are:
a) based on bonds.
b) restricted to bonds.
c) high-risk funds.
d) based on stocks. - answer Income funds are based on bonds, and growth
is derived by the regular interest income the bonds pay and their possibility
for capital appreciation. Income funds are not restricted to bonds and some
may also hold high-quality stocks. Income funds are a lower-risk fund.Ref:
2.2.4
Jeffrey used $155,000 of his inheritance to purchase an Individual Variable
Insurance Contract with M & J Insurance Co. The maturity on the contract
was a deposit-based guarantee of 75%. Ten years later, the contract was
worth $245,365.
Not including fees and charges owed, how much will Jeffrey receive at
maturity?
a) $245,365
b) $128,898.75
c) $0
, d) $184,023.75 - answer Jeffrey will receive $245,365 on the maturity of the
contract. The guarantee is $245,365 × 75% = $184,023.75, however that is
the minimum as the investor receives the greater of the maturity guarantee
or the market value of the fund. (Refer to Section 1.3.1.4)
Theo is 60 years old and is planning to retire this year. He will start receiving
his retirement pension after he turns 65. He has $120,000 in savings, which
he would like to invest in a way that provides him with guaranteed monthly
income until his pension payments begins. Which of the following is a
suitable recommendation for Theo?
a) A 5-year term annuity contract
b) A segregated fund investment with guaranteed lifetime withdrawal benefit
c) A segregated fund investment with guaranteed minimum withdrawal
benefit
d) A single-life deferred annuity contract - answer A 5-year term annuity is a
suitable recommendation for Theo to provide him with temporary income
unitl his pension payments begin in 5 years.A term annuity provides an
income to an annuitant for the term of time stated in the contract. The
payment period may be as short as a few years or may last for decades. A
term annuity is useful to bridge income between two dates, such as between
the time when an employee takes an early retirement and the time when he
starts to receive his pension.
Marcin is in his late 70s and meets with his insurance agent, Anton, with
whom he had purchased several insurance products. Marcin's health is
declining and he informs Anton that he would like to name him as his power
of attorney. How should Anton respond to Marcin's request?
a) He should decline being named as Marcin's power of attorney.
b) He should decline the request only if there is no remuneration.
c) He should accept Marcin's request but inform his direct supervisor about
it.
d) He should accept Marcin's request and keep it confidential. - answer He
should decline being named as Marcin's power of attorney.
Rationale:An agent should decline being named as an attorney and must
exercise caution when confronted with dealing with an attorney for property.
The attorney has many powers for dealing with the individual's property
