WFG LIFE INSURANCE MOCK QUESTIONS &
ANSWERS
Amy and Jennifer recently adopted their son, Marcus. They set up life insurance policies
several years ago when they moved in together. They know that with the new addition
to their family they might need to make some changes to their coverage and are
meeting with their advisor.
Marcus is two years old and a very active child. They would like to ensure there will be
enough money to fund ongoing participation in a sporting activity, funds for Marcus'
university experience, as well as living expenses until age 20. Their current liabilities are
a mortgage of $175,000, a student loan of $23,000 and credit card debt of $14,500.
Amy and Jennifer purchased a whole life insurance policy of $100,000 each: $30,000 to
cover their funeral expenses and $70,000 for each other. They also have a joint term-20
life insurance policy to cover their temporary liabilities like their mortgage, student loans,
and credit card debt. Their - Answers -Amy and Jennifer current coverage will be more
than enough to cover their liabilities as well as the new need to provide for Marcus.
Their liabilities have decreased since their first took out their coverage and so they will
not need any more.
Alex applies for life insurance on the life of his spouse, with the help of his agent,
Heather. He wants to receive the death benefit if she dies. However, if Alex and Lily
were to die simultaneously, he wants his children, Cindy and Frank, to receive the death
benefit. In case of his own death, he wants the ownership of the policy to be transferred
to Lily and the death benefit to be payable to his children.
Who will be the contingent beneficiary on this policy? - Answers -Cindy and Frank
Araq is meeting with an agent to set up life insurance for himself. He wants the
insurance to go to his parents so that they will be taken care of if he passes away. Since
they moved here from Sudbury, his parents have been completely dependent on him.
Araq also has two children from his previous relationship. His children live with his old
partner, Sadik, and he only sees them on weekends. Sadik runs an in-home daycare for
their children and a few others in the neighbourhood. She is able to fully sustain himself
and their children without any financial support from Araq.
What must Araq include in his life insurance policy - Answers -Araq must name his
parents as the beneficiaries, and if he would like to provide support from his insurance
policy, he will need to inform his parents.
Scott and Devin co-own the chocolate company, Candy 4 Us. They decide to purchase
criss-cross whole life policies to insure their interests in the company. Which of the
, following statements is accurate? - Answers -Scott owns and controls the policy
insuring Devin's life.
Diane has a $300,000 universal life (UL) policy with a level death benefit plus account
value. Three months ago, when Diane's cash value was $100,000, she withdrew
$50,000 to pay for major renovations to her house. Yesterday, she died in an accident.
Assuming that the net return on the investments over the last three months is 2%, that
Diane has not paid any premiums since her withdrawal, and that the annual insurance
cost and policy expenses were due to be deducted next month, how much will her
beneficiaries receive from her policy? - Answers -$351,000
Philip is considering buying a universal life (UL) policy but is debating whether he
should take out the level death benefit or the level death benefit plus account value
option.
Which of the following statements about the differences between these two options are
true? - Answers -The investment account value will increase more rapidly with the level
death option; If Philip feels his insurance needs may increase, he should choose the
level death benefit plus account value option.
Calvin and Rebecca, both aged 36, are common-law partners and have an 8-year-old
daughter. While reviewing their life insurance needs, Calvin indicates that if he dies, he
wants to have enough insurance to cover their daughter's living expenses until she is 22
years old and he wants Rebecca's living expenses to be covered until she reaches age
62. It is determined that the living expenses for their daughter are $1,600 per month and
Rebecca's living expenses are $3,500 per month.
Using the capital drawdown method, how much life insurance coverage does Calvin
need? - Answers -$1,360,800
Rebecca and Calvin's daughter must be covered for 14 years with $1,600 in monthly
expenses. Rebecca must be covered for 26 years with $3,500 in monthly expenses.
The amount of life insurance required using the capital drawdown method is determined
as follows:
[($1,600 × 12) × 14] + [($3,500 × 12) × 26] = $1,360,800.
Among the following four individuals, which two have higher odds of dying than the
average Canadian? - Answers -Peter, a smoker, whose parents both died of cancer
before the age of 55; Sarah, an active member of a local parachute club, who jumps on
a weekly basis.
Frank's employer provides non-contributory group life and health insurance. Frank has
life coverage for up to two times his salary and $50,000 of dependent life coverage for
his wife. Frank's life policy names his siblings as beneficiaries.
ANSWERS
Amy and Jennifer recently adopted their son, Marcus. They set up life insurance policies
several years ago when they moved in together. They know that with the new addition
to their family they might need to make some changes to their coverage and are
meeting with their advisor.
Marcus is two years old and a very active child. They would like to ensure there will be
enough money to fund ongoing participation in a sporting activity, funds for Marcus'
university experience, as well as living expenses until age 20. Their current liabilities are
a mortgage of $175,000, a student loan of $23,000 and credit card debt of $14,500.
Amy and Jennifer purchased a whole life insurance policy of $100,000 each: $30,000 to
cover their funeral expenses and $70,000 for each other. They also have a joint term-20
life insurance policy to cover their temporary liabilities like their mortgage, student loans,
and credit card debt. Their - Answers -Amy and Jennifer current coverage will be more
than enough to cover their liabilities as well as the new need to provide for Marcus.
Their liabilities have decreased since their first took out their coverage and so they will
not need any more.
Alex applies for life insurance on the life of his spouse, with the help of his agent,
Heather. He wants to receive the death benefit if she dies. However, if Alex and Lily
were to die simultaneously, he wants his children, Cindy and Frank, to receive the death
benefit. In case of his own death, he wants the ownership of the policy to be transferred
to Lily and the death benefit to be payable to his children.
Who will be the contingent beneficiary on this policy? - Answers -Cindy and Frank
Araq is meeting with an agent to set up life insurance for himself. He wants the
insurance to go to his parents so that they will be taken care of if he passes away. Since
they moved here from Sudbury, his parents have been completely dependent on him.
Araq also has two children from his previous relationship. His children live with his old
partner, Sadik, and he only sees them on weekends. Sadik runs an in-home daycare for
their children and a few others in the neighbourhood. She is able to fully sustain himself
and their children without any financial support from Araq.
What must Araq include in his life insurance policy - Answers -Araq must name his
parents as the beneficiaries, and if he would like to provide support from his insurance
policy, he will need to inform his parents.
Scott and Devin co-own the chocolate company, Candy 4 Us. They decide to purchase
criss-cross whole life policies to insure their interests in the company. Which of the
, following statements is accurate? - Answers -Scott owns and controls the policy
insuring Devin's life.
Diane has a $300,000 universal life (UL) policy with a level death benefit plus account
value. Three months ago, when Diane's cash value was $100,000, she withdrew
$50,000 to pay for major renovations to her house. Yesterday, she died in an accident.
Assuming that the net return on the investments over the last three months is 2%, that
Diane has not paid any premiums since her withdrawal, and that the annual insurance
cost and policy expenses were due to be deducted next month, how much will her
beneficiaries receive from her policy? - Answers -$351,000
Philip is considering buying a universal life (UL) policy but is debating whether he
should take out the level death benefit or the level death benefit plus account value
option.
Which of the following statements about the differences between these two options are
true? - Answers -The investment account value will increase more rapidly with the level
death option; If Philip feels his insurance needs may increase, he should choose the
level death benefit plus account value option.
Calvin and Rebecca, both aged 36, are common-law partners and have an 8-year-old
daughter. While reviewing their life insurance needs, Calvin indicates that if he dies, he
wants to have enough insurance to cover their daughter's living expenses until she is 22
years old and he wants Rebecca's living expenses to be covered until she reaches age
62. It is determined that the living expenses for their daughter are $1,600 per month and
Rebecca's living expenses are $3,500 per month.
Using the capital drawdown method, how much life insurance coverage does Calvin
need? - Answers -$1,360,800
Rebecca and Calvin's daughter must be covered for 14 years with $1,600 in monthly
expenses. Rebecca must be covered for 26 years with $3,500 in monthly expenses.
The amount of life insurance required using the capital drawdown method is determined
as follows:
[($1,600 × 12) × 14] + [($3,500 × 12) × 26] = $1,360,800.
Among the following four individuals, which two have higher odds of dying than the
average Canadian? - Answers -Peter, a smoker, whose parents both died of cancer
before the age of 55; Sarah, an active member of a local parachute club, who jumps on
a weekly basis.
Frank's employer provides non-contributory group life and health insurance. Frank has
life coverage for up to two times his salary and $50,000 of dependent life coverage for
his wife. Frank's life policy names his siblings as beneficiaries.
