Oliver, an insurance agent, meets with Roman and Julie. They are a married couple with a five-year-old son William. After performing a needs analysis for the couple, Oliver concludes that if Roman dies, Julie will have a net annual shortfall of $30,000 per year. Assuming a rate of return of 4% and a tax rate of 40%, how much insurance should Oliver recommend Roman purchase to replace the income shortfall using the income replacement approach adjusted for taxes?
Maeve is an Ontario resident. Fifteen years ago, she purchased a $250,000 whole life insurance policy and named her husband Guillaume as the primary beneficiary and her 4-year-old son Edwin as the contingent beneficiary. Last week, Tasha, Maeve's insurance agent called her to ask if she has had any life changes that would warrant a meeting to review her insurance coverage. Maeve informs her that over the last year she divorced Guillaume and that she is now living with her new boyfriend Eduardo. Tasha asks to meet Maeve to review her beneficiary designation. Who will receive Maeve's death benefit if she dies today?
Francis owns a $250,000 insurance policy with an accidental death and dismemberment (AD&D) rider. Francis calls his insurance agent Andrew to inform him that he permanently lost the use of his right hand. He explains to Andrew that his brother shot him when he broke into his brother’s house to recover a gold watch that was rightfully his. Francis wants to know how much he will receive from his AD&D rider.
Joseph, a retired jeweler, meets with Larry, an insurance agent with Summit Life Co., to review Joseph's life insurance needs. Joseph has made it clear in his will that upon his death, his son will inherit his collection of diamond necklaces, valued at $1.8 million.
What type of asset is Joseph's diamond necklace collection considered to be?
Barry, a life insurance agent, is meeting his client Diane who came to Canada 26 years ago. Diane is turning 60 years old and is considering purchasing a non-registered life annuity to supplement her retirement income. Barry presented the quote to her and it was quickly accepted. During the application process, he recorded Diane’s contact information, used her Social Insurance card to ascertain her identity, and collected a cheque of $120,000 from a joint account. The names written on the cheque were Diane and Geoffrey. Diane explained that this was a joint account with her brother. What should Barry do to comply with FINTRAC’s guidelines regarding ascertaining identity?
Ten years ago, Albert purchased a life insurance policy and designated his brother Stephen as the sole beneficiary. Albert is single and Stephen is his only family. Albert is a frequent traveler and enjoys doing exotic sports in South Africa. During his trip in South Africa in July 2019, there was a heavy earthquake in the region and a lot of the buildings fell apart. It was reported that Albert could be drinking in one of the restaurants when the disaster happened. His body was not located at that time. The South African government declared the incident as a national disaster. After the incident, Stephen got a letter from the life insurance company indicating Albert’s life insurance was in grace period and a payment was required or it will lapse on August 15, 2019. Two weeks have passedsince the mail arrived and the grace period is over. The policy is now lapsed because Stephen was occupied with Albert’s disappearance. On October 1, 2019, Albert’s body is finally located in one of the building ashes. The coroner’s report indicated he died when the building collapsed. What should Stephen do to handle the life insurance matter?
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?
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?
Laraine wants to purchase an Individual Variable Insurance Contract (IVIC) because of the death benefit guarantee as she has been ill. She has decided on a segregated fund which has, as its underlying asset, units of a mutual fund that invests in North American common shares. Her insurance agent, Jeffrey, wants her to understand key issues before she completes and signs the application. What should Jeffrey do?
Harris is the father of Aden, Charlie, and Edmond. They are turning 29, 26, and 24 this year respectively. Harris purchased a life insurance policy with Aden as the life insured, Charlie as the successor owner, and Edmond as co-owner of the policy. He also named his wife, Becky, as the irrevocable beneficiary. Years have passed and the life insurance accumulated sufficient cash value. Harris is working out of town most of the time and none of the family members can get hold of him. One day, Harris encounters a car accident in another country and becomesunconscious. Becky and the children decide to cancel the policy and remit the cash value to Harris’s hospital. Which party can execute the intended transaction?
TESTED 24 Apr 2025
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