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Segregated funds & annuities MOCK EXAM

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Segregated funds & annuities MOCK EXAM

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  • July 2, 2024
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  • 2023/2024
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EXAMQA
Segregated funds & annuities MOCK
EXAM
Tax free savings account - ANS-Upon withdrawal from a ________, neither the principal
deposit nor the income earned within the plan are treated as taxable income in the
hands of the plan holder.

Registered retirement income fund - ANS-The annual minimum ________withdrawals
can be based on the age of the annuitant's spouse or common-law partner. The
younger the age of the measuring life the lower the minimum withdrawal will be, leaving
more funds to grow tax-deferred in the ________.

1. What is a disadvantage of owning a mutual fund? - ANS-Service fees impact the
returns when investing for the long term

2. Ethan is a 24-year-old oil rig worker who has been saving to go to university for the
past few years. Tuition for the first year is due next week and will be $18,000 including
books. If tuition experiences 6% inflation, how much will Ethan need to have in his bank
account now, to be able to pay for a four year degree? - ANS-$78,743

3. Marta is a young aggressive investor. She is looking for a segregated fund that has
the potential to make her a lot of growth. Since she will not make any withdrawals until
maturity, volatility is not a concern to her. Which is the best fund for her? - ANS-An index
fund that tracks global emerging markets.

4. Which statement would be most useful in explaining to a client how mutual funds and
segregated funds function? - ANS-Both segregated funds and mutual funds work on the
pool concept. Professional fund managers monitor all investments closely.

5. Melanie is 62 years old. She is considering investing in a product which her agent
identifies as having a guaranteed minimum withdrawal benefit. Which normal advantage
of a segregated fund contract will she lose if she wishes to take full advantage of the
features associated with the guaranteed minimum withdrawal benefit (GMWB)? -
ANS-Liquidity.

6. Which of the following investments presents the investor with the least risk? -
ANS-Treasury Bills. (T-Bills)

, 7. Joshua has purchased an Individual Variable Insurance Contract (IVIC) featuring a
Guaranteed Lifetime Withdrawal Benefit (GLWB). In the first year of guaranteed income,
Joshua's income was $12,200, or 5% of the value of the contract. This was the
guaranteed amount. At the same time, Joshua's investment returns were 7% and his
management fees represented 4% of the value of the fund. What will the consequences
be for Joshua's income in the future? - ANS-His income will remain at least $12,200.

8. Ash passes away in a car accident. He had a segregated fund with an 80% maturity
guarantee and an 80% death benefit guarantee. Ash's deposits totaled $5,600. The
insurer paid a guaranteed top-up of $1,480 to the annuitant. What is the market value of
the segregated fund at Ash's death? - ANS-$3,000 Calculations $5,600 x 0.80 = $4,480
- $1,480 = $3,000

9. Janice has a segregated fund that she originally paid a premium of $150,000, she
paid the premium and signed the contract on March 4th, 2012. Her contract included a
75% guarantee at death and maturity with a 10-year maturity date. Janice has selected
a stock market account investing in Canadian equities. The Insurance company that she
is dealing with recently experienced some financial difficulties related to severe market
losses. Melania, a life insurance agent is meeting with her in early March 2020 at a time
when the markets are at their all time low. The headlines today are that the insurance
company that Janice is dealing with has become insolvent and have lost their charter to
conduct insurance business. The current market value of the contract is $68,000, she
expresses significant concern and wonders what her options are. Melania informs her
that Assuris, the consumer protection organization that back up i - ANS-Assuris will
offset some of her losses if she holds onto the contract until maturity. The minimum
amount that she will have at maturity is $95,625

10. Alyson is meeting with Hector, a 64-year-old man. Hector has accumulated an
investment portfolio which includes $300,000 in a non-registered segregated fund. He
expresses concerns about his tendency to overspend when he knows he has that much
disposable income available. He also expresses concerns about taking the most
tax-efficient steps possible and would like his income to last for the remainder of his life.
Alyson recommends the use of an annuity to meet his needs. What type of annuity
would be the most appropriate recommendation for Hector? - ANS-A prescribed life
annuity with a 20-year guarantee

11. Chester and Chelsea are a couple in their late 50s. They have both experienced
health challenges in the past but are now in reasonably good health. Chester had some
heart issues and Chelsea had a minor form of cancer from which she is now in
remission and has been since her last check-up five years ago. They have an

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