LLQPMockExam · Topics · Exam guide · Sample questions
Practice questions written by us, with the correct answer and the rule cited. They are not official questions.
1. Hassan has a $250,000 whole life policy with an accidental death benefit rider of $100,000 on his own life. He dies suddenly of a stroke. What total amount is payable to his beneficiary?
A stroke is a disease, not an accidental bodily injury, so the accidental death rider pays nothing and only the $250,000 base death benefit is payable. The figure of $350,000 assumes the rider also pays, $100,000 is the rider alone, and $150,000 wrongly subtracts the rider from the base amount.
2. Which of the following is NOT a non-forfeiture option on a permanent life insurance policy with a cash value?
Non-forfeiture options protect the cash value if premiums stop: cash surrender, reduced paid-up insurance, extended term insurance and an automatic premium loan. Paid-up additions are a dividend option of a participating policy, chosen while premiums are being paid, so they are not a non-forfeiture option.
3. Ingrid has an indemnity-type long-term care policy with a monthly benefit of $4,200. Once the benefit trigger is met, she moves to a care facility that costs $2,850 per month. What monthly benefit does the policy pay?
An indemnity-type long-term care policy pays the stated benefit amount once the benefit trigger is met and the insured is receiving eligible care, whatever the actual cost of that care, so Ingrid receives $4,200 per month. A reimbursement-type policy would pay the actual cost of $2,850, up to its maximum. The figure of $1,350 is the difference between the two amounts, and $7,050 wrongly adds them.
4. Under subsection 42(2) of the Canada Pension Plan, a disability is severe only if the person:
Subparagraph 42(2)(a)(i) of the Canada Pension Plan says a disability is severe only if the person is “incapable regularly of pursuing any substantially gainful occupation”. This is a test against any occupation, not the person's own occupation, and it does not depend on a loss of earnings or a minimum time away from work; the length of the disability is covered by the separate prolonged test.
5. Priya invests $60,000 in a segregated fund contract. Assume the maturity guarantee is 75% of the deposits and no withdrawals were made. At maturity the market value is $41,000. How much must the insurer add to her contract to honour the maturity guarantee?
The guaranteed amount is 75% x $60,000 = $45,000, and the insurer adds the shortfall between that amount and the market value: $45,000 - $41,000 = $4,000. Adding $19,000 wrongly treats 100% of the deposits as guaranteed ($60,000 - $41,000), $45,000 is the guaranteed amount itself rather than the shortfall, and $15,000 is the 25% of the deposits that is not guaranteed.
6. Owen will turn 71 on June 12, 2027, and his RRSP has not yet matured. By the end of which year, at the latest, must his plan mature?
A plan can be registered only if “the plan does not provide for maturity after the end of the year in which the annuitant attains 71 years of age”, according to paragraph 146(2)(b.4) of the Income Tax Act. Owen attains 71 in 2027, so the plan must mature by December 31, 2027. Ending 2026 is too early because he is 70 then, and the ends of 2028 and 2029 come after the year in which he turns 71.
7. In Ontario, Fatima's life insurance licence does not specify an expiry date. It was last renewed on March 1, 2025. When does the licence expire under O. Reg. 347/04?
Section 6 of O. Reg. 347/04 says a licence expires on the date specified in the licence or, if no date is specified, “on the second anniversary of the date the licence was last issued or renewed”. Two years after March 1, 2025 is March 1, 2027. March 1, 2026 is only the first anniversary, while March 1, 2028 and March 1, 2029 would be the third and fourth anniversaries.