ifse llqp practice test

Six years ago, when Kacey was working as an active firefighter, she purchased a $200,000 30-year
term life insurance policy. At the time, the insurance company rated her policy. Recently, she
changed roles and now works for the fire department’s public relations office, answering media calls
and filling out paperwork. She meets with her insurance agent, Bernice, to ask if the insurer would
consider reducing her premiums.

• A. The premiums cannot be increased once the policy is issued.
• B. The insurer cannot reduce the premium, but Kacey can apply for a new policy at a lower premium.
• C. The premiums can be reduced only if the policy has been in force for more than two years.
• D. Her premiums can be reduced since she is no longer a firefighter.

Ten years ago, Anastasia purchased a $125,000 10-year term renewable life insurance policy. Her
insurance need has not changed, and she is still in good health. She asks her insurance agent Raphael
what she should do.

• A. Renew her current policy at the same rate.
• B. Renew the policy at an increased rate.
• C. Renew her policy and restart the incontestability period.
• D. Shop around for a better rate.

Aaliyah is a 37-year-old account manager at a large pharmaceutical company. She earns $300,000 a
year plus bonuses. She meets with Theo, an insurance agent, to review her life insurance needs.
Theo deduces that Aaliyah needs a $250,000 universal life (UL) insurance policy. Aaliyah agrees but
states that she wants to keep her premiums low. Which of the following UL death benefit options
would BEST suit her needs?

• A. Level death benefit.
• B. Level death benefit plus account value.
• C. Level death benefit plus cumulative premiums.
• D. Indexed death benefit.

Konrad is the owner of CrossBoy, a manufacturing company employing over 50 employees. Konrad
recently took out a $500,000 loan to expand his business. Terrence works as a sales manager and is
responsible for roughly 40% of the company’s revenue. Konrad recognizes the importance of
Terrence's contributions to the success of the company. Therefore, in addition to a sizeable
basesalary, CrossBoy also pays Terrence regular performance-based bonuses. Konrad understands
that if Terrence dies prematurely, CrossBoy would suffer financially. What should he do to protect his
company?

• A. Offer Terrence group life insurance plan.
• B. Purchase business-owned buy-agreement with Terrence.
• C. Purchase key person life insurance on Terrence.
• D. Purchase criss-cross insurance with Terrence.

Coraline owns a $250,000 whole life insurance policy. She purchased the policy last year and does
not have any funds accumulated in her cash surrender value (CSV). On December 30, Coraline
assigns the policy to the cancer foundation, and she plans on continuing to pay the $200 monthly
premium. Coraline calls her accountant James to ask him how much of her donation she will be able
to use to obtain a charitable tax credit this year.

• A. $0
• B. $200
• C. $2,400
• D. $250,000

Three years ago, Douglas purchased a whole life insurance policy with numerous supplementary
benefits and riders. Today, he meets with his doctor who informs him that he has late-stage colon
cancer and has only a few months to live. Even with surgery, his chances of survival are low. Douglas
calls his insurance agent, Penny, to ask her what he should do to obtain a benefit immediately.

• A. Dread disease benefit.
• B. Terminal illness benefit.
• C. Policy loan.
• D. Policy withdrawal.

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?

• A. Liquid asset.
• B. Investment asset.
• C. Fixed asset.
• D. Pension asset.

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?

• A. $390,000
• B. $750,000
• C. $1,250,000
• D. $1,875,000

Dr. Kumar owns a 10-year term life insurance policy with a level death benefit of $500,000 issued by
Expert Health & Life Inc. The policy is renewable, convertible to age 70, and contains no additional
riders. Dr. Kumar is the life insured. She is single, has no dependents, and her estate is named as the
policy’s beneficiary. The current premiums are $365 per year, based on standard health, non-smoker
rates. As the policy is due to renew in a few months, Dr. Kumar meets with Kavya, an insurance agent
referred to her by a mutual friend. Kavya reviews all of the information presented above, but notices
a missing detail.
What additional information about Dr. Kumar's policy does Kavya need to complete her review?

• A. The policy conversion age.
• B. The policy death benefit amount at renewal.
• C. The policy cash surrender value (CSV).
• D. The policy premiums upon renewal.

Aari and Jonila are a married couple in their late sixties. They both enjoy a comfortable retirement.
Both receive regular payments from their pension plans, Old Age Security (OAS) and Canada Pension
Plan (CPP). They own a house and a cottage that are both mortgage-free. They also have over
$500,000 in savings and investments. They know that if one of them dies, the surviving spouse will
be financially comfortable. The couple has two grown children to whom they would like to leave all
their assets when they die. The couple informs Herbert, their insurance agent, that they want to
make sure when they die that their children have the funds needed to pay the taxes on the assets
that they will bequeath them.
Which life insurance policy would be most suited to meet the couple's needs?

• A. A permanent joint last-to-die policy on Aari and Jonila.
• B. A permanent joint first-to-die policy on Aari and Jonila.
• C. A term joint last-to-die policy on Aari and Jonila.
• D. A term joint first-to-die policy on Aari and Jonila.