Pass the IFSE Institute Life License Qualification Program LLQP Questions and answers with CertsForce

Comprehensive and Detailed Explanation:

Group insurance premiums are adjusted annually based onclaims experience—the ratio of claimspaid to premiums collected (Chapter 8:Group Plan Specifics). High claims increase premiums.

Option A: Age affects initial rates, not annual adjustments unless specified.

Option B: Correct; claims experience directly drives premium changes.

Option C: Business nature sets initial risk, not yearly changes.

Option D: Commissions are fixed, not tied to claims.

Eric has a shorter time horizon (3–5 years) and needs a lower-risk, more diversified investment approach suitable for saving for a house. A balanced fund spreads investments across stocks and bonds, helping reduce risk compared to the high volatility of a single-sector natural resources fund.

Exact Extract:

"Balanced funds combine equity and fixed-income investments to reduce portfolio volatility, providing moderate growth for investors with medium-term objectives."

(Reference: Segfunds-E313-2020-12-7ED, Chapter 2.2.5 Balanced Funds【49:1†Segfunds-E313-2020-12-7ED.pdf**)

To calculate net worth, we sum the couple’s assets and subtract their liabilities. The calculation is as follows:

Assets:

Leonard’s chequing account: $3,000

Ashley’s chequing account: $3,000

Leonard’s group RRSP: $40,000

Ashley’s car (Subaru WRX): $20,000

Total Assets:$66,000

Liabilities:

Ashley’s car loan: $10,000

Leonard’s student loan: $30,000

Total Liabilities:$40,000

Net Worth Calculation:

$66,000 (Assets) - $40,000 (Liabilities) = $26,000

The couple’s net worth is therefore $26,000, which aligns with LLQP methodologies for net worth calculations by considering all assets minus liabilities​.

Since Justin’s annuity had no guaranteed period and no survivor benefit, payments stop at death. Thus, no death claim can be made.

Exact Extract:

"For a single life annuity with no guarantee period, payments cease upon the death of the annuitant, and no death claim can be made."

(Reference: Segfunds-E313-2020-12-7ED, Chapter 3.2.2.1 Single Life Contract【49:4†Segfunds-E313-2020-12-7ED.pdf**)

Lily’s RRSP contribution room is reduced by her DCPP contributions. Her total income for Year 2 was $125,000, and she contributed 5% ($6,250) to the DCPP, matched by the employer, for a total of $12,500. The Pension Adjustment (PA) for her DCPP contribution would be $12,500, which reduces her RRSP contribution room.

Calculation:

RRSP limit based on previous year’s income (18% of $120,000): $21,600

PA reduction: $12,500

Remaining RRSP contribution room for Year 2: $21,600 - $12,500 = $9,100

Including her unused contribution room: $9,100 + $15,000 = $24,100

So, Lily can contribute $24,600 to her RRSP in Year 2​.

A Registered Education Savings Plan (RESP) is specifically designed to fund education savings and allows contributions for a named beneficiary (Brienne), making it the perfect choice.

Exact Extract:

"An RESP is an education savings plan sponsored by the government, providing grants and tax-deferral advantages for beneficiaries saving for post-secondary education."

(Reference: Segfunds-E313-2020-12-7ED, Chapter 1.3.11.3 Group Plans and Registered Education Savings Plans​)

By investing heavily in a single sector (mining), Nancy faces industry risk. Industry-specific issues such as regulation changes, market conditions, or operational challenges could severely impact her investments.

Exact Extract:

"Industry risk is the risk that factors affecting an entire industry may negatively impact investments within that sector. Concentrating investments in a single industry increases exposure to this type of risk."

(Reference: Segfunds-E313-2020-12-7ED, Chapter 1.4.9 Industry Risk​)

Group TFSA contributions are made with after-tax money and grow tax-free. GRRSP contributions reduce taxable income immediately because they are tax-deductible.

Exact Extract:

"Contributions to a TFSA are not deductible and must be made with after-tax dollars. RRSP (and GRRSP) contributions are tax-deductible, reducing taxable income."

(Reference: Segfunds-E313-2020-12-7ED, Chapter 1.3.11 Group Plans​)

Under the LLQP Segregated Funds and Annuities and Taxation curriculum, the rules governing annuities funded with Registered Pension Plan (RPP) proceeds are very specific. When pension funds are used to purchase an annuity, the annuity must comply with registered annuity rules, which strictly control who can be the owner and annuitant.

In Franco’s situation, the proceeds of his RPP are being transferred to an immediate life annuity. According to LLQP principles, when an annuity is funded with registered pension money, the member of the pension plan must be both the owner and the annuitant of the annuity. This requirement exists to preserve the tax-deferred nature of pension income and to ensure that the retirement income is paid directly to the individual who earned the pension entitlement.

Because the annuity is purchased with RPP funds, Franco cannot designate another person—such as his spouse—as the annuitant. Doing so would be considered an inappropriate transfer of registered pension benefits and would violate the tax rules governing registered plans. As a result, Franco must be both the contract owner and the annuitant, receiving the annuity payments himself.

It is important to distinguish this from other situations involving RRSP-funded deferred annuities, where a spouse may sometimes be named as annuitant under specific conditions. However, those rules do not apply to annuities purchased directly with RPP proceeds. The fact that the annuity is immediate further reinforces this requirement, as payments must begin right away to the pension plan member.

While Franco may be able to provide survivor benefits or a guaranteed payment period for his spouse within the annuity structure, he cannot name her as the annuitant for tax purposes.

Therefore, in accordance with LLQP-approved annuity and pension transfer rules, the correct advice is Option A: Franco cannot name his wife as annuitant because the annuity is funded by his RPP proceeds, requiring him to be both owner and annuitant.

Insurance records must generally be retained for a minimum period to comply with provincialregulatory requirements, which is often five years from the date of termination. This helps ensure compliance with record-keeping mandates and allows for any legal, financial, or administrative review if needed. Gino is obligated to retain Nathan’s file until it has been closed for at least five years, despite the change in representation or policy status​​.

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