LLQP Free Practice Test

- (Topic 3)
Marsha and Alexis are equal partners in an advertising firm. They meet with Jose, an insurance agent, and Horacio, their lawyer, because they would like to protect themselves if one of them becomes disabled and unable to work for an extended period of time. At the end of their meeting, they agree to purchase $500,000 disability insurance policies on each other by each of them paying premiums.
What type of agreement do Marsha and Alexis have?

1. A. Cross-purchase agreement
2. B. Key person insurance
3. C. Entity purchase agreement
4. D. Business loan protection disability insurance

Correct Answer: A
In across-purchase agreement, business partners purchase disability or life insurance policies on each other. If one partner becomes disabled, the other partner uses the proceeds from the insurance to buy out the disabled partner??s share in the business. Marsha and Alexis have agreed to purchase disability insurance policies on each other, with each paying the premium on the policy for their partner. This structure aligns with the cross-purchase format, where each partner independently holds the policy on the other, as described in LLQP materials on business continuation planning. The other options, such as an entity purchase agreement, involve the business purchasing the policy, which is not the case here.

- (Topic 5)
(Garry, a 55-year-old self-employed individual with no pension or RRSP savings, wants to make his money work for him over the next 10 years before retirement.
Which product would be suitable?)

1. A. A variable income accrual annuity with deferred payment in 10 years
2. B. A 10-year prescribed payout annuity
3. C. An accumulation annuity with deferred payment in 10 years
4. D. A 10-year immediate term accumulation annuity

Correct Answer: C
Anaccumulation annuityallows Garry tosave and grow his investmentsover the next 10 years withdeferred paymentsstarting at retirement, matching his timeline and retirement goals.
Exact Extract:
"An accumulation annuity is used to accumulate savings over time. Payments commence at a later date specified by the investor (deferred payments)."
(Reference:Segfunds-E313-2020-12-7ED, Chapter 3.2.1.2 Accumulation Annuity)

- (Topic 3)
Juniper, 69, suffered a stroke a few weeks ago which left her partially paralyzed and has severely reduced her mobility. Since the stroke, she is unable to leave her home. She benefits from regular visits from nurses, massage therapists, and housekeepers. Juniper wants to claim the services on her long-term care (LTC) insurance policy and would like to know how the claim will be processed and paid.
Which of the following answers is CORRECT?

1. A. The insurer will pay the nurse and the massage therapist directly and Juniper will have to pay the housekeeper out of pocket.
2. B. Juniper will have to pay for all of the services first and then submit the receipts for all qualifying expenses to her insurer for reimbursement under the home care clause of her LTC policy.
3. C. The insurer will pay for all of the services directly.
4. D. Juniper will have to pay for all the services, but she could only claim for reimbursement of the costs of the nursing care, under the home care clause of her LTC policy.

Correct Answer: B
Long-term care (LTC) insurance policies with home care benefits typically require the insured to cover the costs upfront and then submit receipts for reimbursement. Juniper, having regular services from nurses, massage therapists, and housekeepers, would need to pay for these services initially and then file a claim for reimbursement of qualifying expenses, as per the terms of her LTC policy. Generally, such policies cover medically necessary services like nursing care, and possibly massage therapy, but may not include housekeeping as a reimbursable expense. This approach ensures that only eligible services as defined by the policy are reimbursed.

- (Topic 4)
Vasu, an insurance agent, meets with Francine, his new client. Francine wants to purchase a disability insurance policy. Vasu helps her complete the application form. In the process, he collects all the required medical and lifestyle information on his client and wonders what he must do with the information he collected.
Which of the following options is CORRECT?

1. A. Vasu must send a copy of the medical and lifestyle-related information to the insurer, his supervisor, and his client, and must keep a copy in his file.
2. B. Vasu must send a copy of the medical and lifestyle-related information to the insurer, his supervisor, and keep a copy in his file.
3. C. Vasu must send a copy of the medical and lifestyle-related information to the insurer and keep a copy in his file.
4. D. Vasu must send a copy of the medical and lifestyle-related information to the insurer only, and he cannot keep a copy in his file.

Correct Answer: C
As per LLQP guidelines and privacy regulations in Canada, an insurance agent like Vasu is required to submit all medical and lifestyle-related information to the insurer as part of the application process. Additionally, the agent is permitted to retain a copy of this information in his client file for record-keeping and future reference purposes. It is essential for compliance and potential follow-ups related to policy servicing or claims. Privacy laws do not permit Vasu to share this information with unauthorized parties, such as his supervisor or the client, beyond what is required for processing the application, unless consent has been explicitly provided.
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- (Topic 5)
(Julia deposited capital into an annuity contract that will start payments in three years and continue for 10 years. She is the annuitant; her son Ethan is the beneficiary.
What type of annuity has Julia purchased?)

1. A. A deferred payout 10-year term annuity.
2. B. An accumulation 10-year term annuity.
3. C. An immediate accumulation term annuity with a 10-year guarantee.
4. D. An immediate payout term annuity with no guarantee.

Correct Answer: A
Adeferred payout term annuityinvolves depositing funds now with payments starting after a deferment period (in Julia??s case, 3 years) and continuing for a set term (10 years). Exact Extract:
"A deferred payout annuity begins income payments after a specified deferment period. If a fixed period is selected, it is known as a term annuity."
(Reference:Segfunds-E313-2020-12-7ED, Chapter 3.2.1.1 Payout Annuity)