LLQP Free Practice Test

- (Topic 4)
Sabrina is an insurance representative with an insurance of persons certificate issued by the Autorit?? des march??s financiers (AMF). Her client, Stephanie, is a Quebec resident who accepted a job with Service Canada, in Ottawa, and purchased a condo there. Stephanie calls Sabrina to explain that her new job requires her to work in Ottawa three days per week, but she is still a Quebec resident; she spends four days a week with her family in Granby, Quebec. Stephanie asks Sabrina if she can buy mortgage insurance from her to help cover the mortgage on her new condo.
What should Sabrina answer her?

1. A. Yes, they can complete and sign the application in Ottawa because Stephanie is a Quebec resident.
2. B. Yes, but they would have to complete and sign the application in the province of Quebec.
3. C. No, because Stephanie is a federal government employee.
4. D. No, because Stephanie's condo is outside of the province of Quebec.

Correct Answer: B
In Quebec, insurance regulations require that insurance contracts for residents must be completed within Quebec to be considered valid under Quebec law, regardless of the location of the insured property. Since Stephanie is a Quebec resident, the insurance contract, including the application, must be completed and signed in Quebec. The fact that Stephanie??s condo is located in Ontario does not affect the validity of obtaining mortgage insurance from a Quebec-licensed representative as long as the process adheres to Quebec's legal requirements. This maintains compliance with provincial licensing and residency rules under the AMF.
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- (Topic 5)
Luisa owns a balanced segregated fund currently valued at $50,000. Her mother Linda is the current revocable beneficiary of the policy. However, Luisa has been dating Benjamin for a year and would like to name him as the new beneficiary of her policy.
Which of the following statements about modifying the beneficiary designation is CORRECT?

1. A. The change will take effect on the date that the insurer receives the change of beneficiary form.
2. B. Since Linda is Luisa??s named beneficiary, she would need to consent to the change.
3. C. Luisa can modify the designation anytime.
4. D. Luisa can call the insurer's head office to notify them of the change.

Correct Answer: A
Beneficiary changes in insurance contracts generally become effective once the insurer receives and processes the signed change form. This is supported by LLQP material, which specifies that changes to beneficiary designations must be documented and received by the insurer for the new designation to take effect. Since Linda is a revocable beneficiary, Luisa can make this change without requiring Linda's consent.
Option B is incorrect as revocable beneficiaries do not require consent for changes. Option C is too general, and D is incorrect because a formal written change form is typically required.

- (Topic 4)
Ontario residents, Juan and Maria, are a married couple approaching retirement. They have asked their representative, Carlow, to review the details of Maria??s defined benefit plan (DBPP).
Which of the following statements about Maria's pension is CORRECT?

1. A. Maria would be entitled to an increased benefit if Juan waived his survivor benefit.
2. B. Juan would be entitled to receive at least 50% of Maria??s pension upon Maria's death.
3. C. With Juan's consent, Maria can choose to reduce the survivor benefit to 25% of her normal pension amount.
4. D. Juan will be entitled to the survivor benefit even if they are separated at the time of Maria's death.

Correct Answer: B
In Ontario, the pension legislation stipulates that a spouse is entitled to receive a minimum of 50% of the member??s pension benefits as a survivor benefit if the member dies. This applies to defined benefit pension plans (DBPP), which provide a predetermined benefit upon retirement.Therefore, as the spouse of Maria, Juan would be entitled to receive at least half of Maria??s pension upon her death, as specified by Ontario pension regulations. This survivor benefit is a guaranteed right and requires consent from both spouses for any reduction or waiver. Options C and D are incorrect as Ontario law mandates a minimum 50% survivor benefit without provision for reduction to 25%, and Juan's entitlement is tied to their marital status and statutory rights, which may not apply if they are separated or divorced at the time of Maria's death. Option A is incorrect because Ontario legislation does not provide for an increased benefit by waiving the survivor benefit.

- (Topic 5)
(Gregory and Vanessa married at an early age and had three children, who are now in their forties: Eve, Rick and Max. When the couple retired five years ago, they purchased a joint life annuity. They also had a will drawn up naming the three children as equal beneficiaries of their estate. The will specifies that Eve will act as executor of the estate.
Last week, Gregory and Vanessa both died in a car accident. Who could make a death claim as regards the annuity?)

1. A. Eve
2. B. Rick and Max
3. C. Eve, Rick and Max
4. D. No claim can be made

Correct Answer: D
Since Gregory and Vanessa bought ajoint life annuity without mention of a guarantee period, the annuity wouldcease payments upon the death of the second annuitant. Therefore,no death claimcan be made on the annuity.
Exact Extract:
"In a joint life annuity with no guarantee period, payments stop upon the death of the second annuitant. No death benefit is payable."
(Reference:Segfunds-E313-2020-12-7ED, Chapter 3.2.2.2 Joint Life Contract 53:3†Segfunds-E313-2020-12-7ED.pdf**)

- (Topic 5)
Naomie meets with her new client, Keisha, to review her investment portfolio. Keisha is a
43-year-old sales representative who has been with Belmont Inc., a large pharmaceutical company, for 15 years. She earns a generous salary, plus bonuses. She also has a group tax-free savings account (TFSA) and a defined contribution pension plan (DCPP), all of which are invested in Belmont common shares.
What main need does Naomie have to address regarding Keisha??s investments?

1. A. Liquidity.
2. B. Saving for an emergency fund.
3. C. Diversification.
4. D. Income.

Correct Answer: C
Keisha??s investment portfolio is highly concentrated in Belmont Inc. common shares, which include her TFSA and defined contribution pension plan (DCPP). This significant exposure to a single company??s stock poses a risk because the value of her investments is directly tied to the financial performance of Belmont Inc. Diversification is a key strategy to mitigate risk by spreading investments across various asset classes, industries, or geographic regions. This can reduce the impact of poor performance in any one area on the overall portfolio. According to LLQP content, one of the primary goals in managing an investment portfolio is to ensure appropriate diversification to avoid over-reliance on a single asset or asset type.
While other needs, like liquidity and emergency fund savings, are important, Keisha's immediate concern should be diversification. Her current investments do not provide adequate protectionagainst company-specific risks, such as the potential downturns specific to Belmont Inc. This aligns with LLQP principles, which emphasize diversification as a way to manage risk effectively and achieve a more stable financial outcome.