Seg Mock Exam 6 Questions and Answers

Seg Mock Exam 6 Questions and Answers Johnson is a member of a Group Registered Retirement Savings Plan (GRRSP), to which he and his employer each contribute 5% of his earnings. He is planning to leave his employer for a higher paying job. Johnson wonders whether his GRRSP has vested and whether he has ownership rights on the employer's contributions. When do contributions to GRRSPs vest? a) Two years b) Four years c) 30 days d) Immediately -Correct Answer-(correct) Immediately Rationale: Contributions to a GRRSP vest immediately. (Refer to Section 8.2.2.0) Rose owns a segregated fund contract with a 100% maturity and death benefit guarantee. Her daughter, Natalie, has been named the beneficiary of the contract. Rose died today. The contract was started with an investment of $150,000 and Rose had made several partial withdrawals. Today, the contract value is $100,000. As the beneficiary, how much will Natalie receive? a) $150,000 b) The higher of $100,000 or the guaranteed amount adjusted for partial withdrawals c) $150,000 adjusted for partial withdrawals d) $100,000 -Correct Answer-(correct) The higher of $100,000 or the guaranteed amount adjusted for partial withdrawals Rationale: The beneficiary will receive the higher of the market value or the guaranteed amount after adjustments for partial withdrawals have been made. (Refer to Section 8.7.1.0) Margaret is a new life insurance agent who has just finished her first segregated fund application and collected a client cheque for $5,000. She spent time properly reviewing the details of the contract and explained to her clients the different fees associated with their fund selection. After emailing them the information folder, Margaret went through the questions that they still had. She then completed the application, obtained the clients' signatures, and submitted the signed application. What does Margaret still have to do? a) Make sure that she completes the politically exposed foreign person form and verifies their identification. b) Submit a rider election form because the clients have guaranteed maximum withdrawal benefits. c) Write the contract number on the cheque and send it to the insurer immediately. d) Set up the next annual review with the client before she leaves so that they know she will be - Correct Answer-(correct) Write the contract number on the cheque and send it to the insurer immediately. Rationale: Margaret collected a cheque from her clients and still needs to write the contract number on the cheque and make sure that it is handled securely. It must be submitted to the insurer immediately. (Refer to Section 6.3.3.5) Anna invests mostly in Guaranteed Investment Certificates (GICs). She meets with her financial advisor to discuss the pros and cons of her investments. What are the risks associated with GICs? a) Interest-rate risk and market risk b) Inflation risk and market risk c) Industry risk and credit risk d) Interest-rate risk and inflation risk -Correct Answer-(correct) Interest-rate risk and inflation risk Rationale: The risks of investing in fixed-income investments are increased interest-rate risk and inflation risk. (Refer to Section 1.3.0.0) Ann is a physician and is the owner of the Ann MD Professional Corporation. The corporation has money to invest. Ann, as the only shareholder, decides to invest the corporation's money in a non-registered segregated fund contract. If she dies, she wants her husband, Wesley, to benefit from the investment. In this situation, how should the segregated fund application be completed? a) The corporation as the owner, Ann as the annuitant and Wesley as the beneficiary b) Ann as the owner and annuitant and Wesley as the beneficiary c) The corporation as the owner and annuitant and Ann as the beneficiary d) Ann as the owner, the corporation as the annuitant and Wesley as the beneficiary -Correct Answer-(correct) The corporation as the owner, Ann as the annuitant and Wesley as the beneficiary Rationale: Since the money belongs to the corporation, it will own the segregated fund contract. However, a corporation cannot be the annuitant since the annuitant must be an individual in order to properly manage the death benefit guarantee. Ann will be the annuitant, and if she dies, her husband Wesley will be the beneficiary. (Refer to Section 6.2.1.1) Tim has maximized his Tax-Free Savings Account (TFSA) contributions up to this year. His total investment gain is $5,000. He decides to withdraw the $5,000 on November 15 to pay for a family trip. He will receive a work bonus of $15,000 in mid-December and intends to use that money to re-contribute to his TF