Exam (elaborations)
Ethic Mock Exam 2 Questions and Answers 2023
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Exam of 11 pages for the course LLQP at LLQP (Ethic Mock Exam 2)
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Ethic Mock Exam 2Vanessa owned a life insurance policy on her own life and named her sister Loretta as the beneficiary. Vanessa and Loretta got into a major argument one day and in a fit of anger, Loretta pushed her sister. Vanessa fell over the balcony railing and died. Loretta claimed that it was an accident and she had not intended to kill her sister.
On what grounds did the insurer deny Loretta's claim?
a) Living benefit
b) Exclusion imposed by law
c) Statutory conditions
d) Suicide exclusion - answer (correct) Exclusion imposed by law
Rationale:
Exclusions may be imposed by law (as opposed to being imposed in the life insurance contract) and are
established by decisions made by the courts. They may relate to actions that are deemed a violation of public order, or because the beneficiary or insured caused or ran the very risk insured against, which constitutes grounds for denying the claim for, or the payment of, insurance proceeds.
Margue is a self-employed accountant who earns about $60,000 annually. She is reviewing her financial situation and thinking about what would happen if she were to become unable to work through no fault of her own. She knows that there's a risk she may become disabled or not earn enough during the slow seasons for accountants. Her
friend, Ange is an accountant at a large company that lays staff off regularly. Ange always applies for employment insurance between contracts.
What should Margue be concerned about if she were not able to work?
a) Margue can apply for Workers' Compensation if she were to be come disabled.
b) Margue will have to pay extra tax when she starts to receive EI. c) Margue does not earn enough to receive EI
d) Margue does not qualify for EI because she is self-employed. - answer (correct) Margue does not qualify for EI because she is self-employed.
Rationale:
Employment insurance benefits are only available to Canadians who were employed and lost their job through no fault of their own. Self-employed individuals do not qualify for EI and Margue would not receive the benefit during the slow seasons. Refer to section 1.4.1.3
Tim would like to know if there are maximum and minimum limits to withdrawals that he can make from the accounts that he owns. His agent tells him that there are statutory minimums that he must withdraw from his RRIF and his LIF.
Which of Tim's accounts also has a maximum withdrawal limit?
a) Registered Retirement Savings Plan (RRSP)
b) Registered Retirement Income Fund (RRIF)
c) Life Income Fund (LIF)
d) Tax-Free Savings Account (TFSA) - answer (wrong) Registered Retirement Income Fund (RRIF)
Rationale:
A Life Income Fund (LIF) is a retirement plan into which a person may transfer their pension if they leave a pension plan. Annual minimum and maximum withdrawal amounts are subject to provincial pension laws applying to LIF plans. There are no maximum limits for withdrawals for Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), or Tax-Free Savings Accounts (TFSAs). (Refer to Section 2.7)
Raymond advises his client, Samuel to withdraw money from his segregated fund and invest it in another fund. The new fund will pay a higher commission to Raymond and will also come at a higher cost to Samuel due to the deferred sales charges on the withdrawal and the associated tax implications.
What is this deceptive sales practice called?
a) Churning
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