- (Topic 2)
After meeting with his advisor Monica, Tom agrees to apply for a $50,000 whole life insurance policy. Monica tells him that the monthly premium will be $40 per month. Monica is advised by underwriting that Tom qualifies for an additional $10,000 critical illness rider, and that the new premium would be $50 per month. Monica advises underwriting that Tom accepts the additional coverage without speaking with him first, because it is such a good deal and great coverage, he won??t mind. When Tom finds out what she has accepted on his behalf, without his knowledge, he is upset and wants to lodge a complaint to someone other than the insurance company and Monica; he wants to speak with an independent third party. He finds the contact information for the local regulatory authority. What are some of the responsibilities the regulatory authority has in protecting clients like Tom?
Correct Answer:A
Comprehensive and Detailed in Depth Explanation with Exact Extract from Documents and Guides:
TheIFSE Ethics and Professional Practice Course (Common Law)outlines that provincial/territorial regulatory authorities oversee insurance agents and protect consumers by promoting transparency, enforcing ethical conduct, and facilitating dispute resolution. Monica??s actions (accepting coverage without consent) breach client autonomy and disclosure rules. Regulatory authorities investigate such conduct and refer clients to independent bodies like the OmbudService for Life and Health Insurance for complaints. They don??t reimburse losses (B), organize lawsuits (C), or focus solely on public education and office closures (D). Option A aligns with their role, making it correct.
References:
IFSE Ethics and Professional Practice Course (Common Law), Module 4: Regulatory Environment, Section on "Role of Regulatory Authorities."
- (Topic 2)
Josh is meeting with William, his financial advisor, to notify him of the death of his spouse, Linda, for whom he is the beneficiary. Josh is asking William what requirements are necessary for proof of claim on their life insurance policy. Which of the following documents/information are required by Josh to ensure that a proper claim is approved by the insurance company?
Correct Answer:D
Comprehensive and Detailed in Depth Explanation with Exact Extract from Documents and Guides:
TheIFSE Ethics and Professional Practice Course (Common Law)outlines that to process a life insurance claim, insurers typically require: (1) a completed claim form, (2) proof of death (usually a death certificate), and (3) proof of the insured??s age (e.g., birth certificate) to verify policy terms. Here, Josh needs: (i) Proof of Age to confirm Linda??s identity and policy details; (iii) Claim Form as the formal submission; and (iv) Death Certificate as proof of death. Place of Death (ii) is not a standard requirement unless specified, and a Coroner??s Report (v) is only needed in cases of unusual circumstances (not indicated here). Thus, D—(i), (iii), and (iv)—is correct.
References:
IFSE Ethics and Professional Practice Course (Common Law), Module 2: Insurance Contracts, Section on "Claims Process."
- (Topic 1)
Goran and Tanja married two years ago. Last year, they purchased and moved into a three-bedroom house in the suburbs. The current balance on their mortgage is $655,000. They meet with Ljubomir, an insurance agent, to purchase a joint term life insurance policy to cover the mortgage. When Ljubomir asks about their existing coverage, Goran shares that he has none. Tanja explains that she owns a universal life (UL) policy with a level death benefit of $50,000 and a cash surrender value (CSV) of $5,000, purchased 6 years ago from another agent. Tanja would like to surrender her UL policy and use the $5,000 CSV to pay for a trip to Europe. What additional information about Tanja's UL policy does Ljubomir need to collect?
Correct Answer:B
When considering surrendering a universal life (UL) policy, it is essential to understand the tax implications and any costs associated with surrender. Theadjusted cost basis (ACB)helps determine the taxable portion of the policy??s cash surrender value (CSV) because any amount received above the ACB may be subject to tax. Additionally,surrender chargescould reduce the CSV received upon surrender. Therefore, Ljubomir needs to collect both the ACB and any surrender charges applicable to Tanja's policy. These factors will help Tanja make an informed decision regarding the net amount she would receive from surrendering the policy and the potential tax liability.
- (Topic 5)
Remi owns a registered annuity contract that pays him a $2,500 monthly benefit. He purchased the contract five years ago from money he accumulated in his registered pension plan. At the time, he named his wife Annette as the revocable beneficiary of the contract. Today, he calls Louisa, his insurance agent, to designate his sister as beneficiary of the contract instead. Louisa tells him that there are restrictions on the contract and that he cannot change the beneficiary designation.
Why is Remi unable to make the change?
Correct Answer:D
Since Remi??s annuity was purchased with funds from his registered pension plan, it is likely subject to locking-in provisions, which restrict changes to the beneficiary designation once annuitized. LLQP guidelines state that pensions converted into registered annuities are generally subject to locking-in rules, which often prevent changes to beneficiary designations unless in cases of spousal consent or specific contractual allowances.
Option B is incorrect, as spousal consent is not relevant when the designation is already restricted. Options A and C are also incorrect, as they do not address the locking-in nature tied to the pensionplan.
- (Topic 4)
Alexandre, a financial security advisor, recently left FinCode Inc. because of an unresolved dispute with the company. He is continuing his career as an independent advisor. This week, he has an appointment with a client who tells him that he met with another FinCode Inc. employee. However, that employee has a disciplinary record at the CSF for fraudulently copying a signature on a form. Since the client does not work in insurance and the information is public knowledge, Alexandre provides him with some clarification regarding the other advisor??s case. How can Alexandre encourage the client to do business
with him without denigrating his competitor?
Correct Answer:C
Comprehensive and Detailed In-Depth Explanation: The CSF Code of Ethics (Section 11) prohibits advisors from denigrating competitors, requiring professionalism in client interactions. Alexandre can??t disparage the FinCode advisor despite the public disciplinary record. Option C—emphasizing his unique approach—focuses on his strengths, encouraging business ethically without criticism. Option A (check CSF records) indirectly highlights the competitor??s fault, risking denigration. Option B (departure dispute) introduces irrelevant negativity. Option D (past experience) could lead to prohibited criticism. The Ethics manual promotes positive differentiation over competitor critique, making C the compliant choice.
References: CSF Code of Ethics, Section 11; Ethics and Professional Practice (Civil Law)
Manual, Section on Professional Conduct.
- (Topic 3)
Pat, a 30-year-old youth worker, meets with his life insurance agent to discuss disability insurancecoverage. After a thorough analysis of Pat??s needs, the agent recommends a policy with a $1,500 a month benefit (50% of Pat??s current salary) payable to age 65 after a 31-day waiting period. Pat has put enough money away to cover 6 months?? worth of expenses, if necessary, but he would prefer not to dip into his savings. He applies for the policy, with the expectation that the premium will be $75 a month. He already thinks this is pricey and would not want to pay any more than that. Some time later, underwriting informs the agent that the policy has been approved, but with a 125% premium rating due to Pat being overweight. Which one of the following options would make the most sense to reduce the premium to a level Pat would accept without compromising too much on his coverage?
Correct Answer:A
Comprehensive and Detailed Explanation:
A 125% rating increases the $75 premium to $93.75. Extending the waiting period (e.g., to 90 days) lowers premiums while leveraging Pat??s 6-month savings, maintaining $1,500/month to age 65 (Chapter 7:Insurance Recommendation, Contract, and Service Needs).
Option A: Correct; cost-effective adjustment. Option B: Incorrect; reduces coverage. Option C: Incorrect; increases premiums. Option D: Impractical; delays coverage.
Reference: LLQP Accident and Sickness Insurance Manual, Chapter 7:Insurance
Recommendation, Contract, and Service Needs.