LLQP MODULE 3 EXAM QUESTIONS
AND ANSWERS ALL CORRECT
What is CPP? - Answer- Earnings-based federal pension based on contributions during
working years.
When can CPP benefits start? - Answer- At age 60 (reduced) or deferred to age 70
(enhanced).
What is the difference between Defined Benefit and Defined Contribution plans? -
Answer- DB promises a specific pension amount; DC has fixed contributions with the
employee bearing investment risk.
What is a Pension Adjustment (PA)? - Answer- Reduces an employee's RRSP
contribution room to account for pension benefits earned.
What is risk tolerance? - Answer- How much volatility a client is willing to accept.
What is risk capacity? - Answer- How much risk the client can afford based on financial
situation.
What is a Straight Life Annuity? - Answer- Provides maximum income for life with no
residual to estate.
What product helps a business owner facing a lawsuit protect savings? - Answer-
Segregated fund with an irrevocable family member as beneficiary.
What happens to a beneficiary if the annuitant of a seg fund dies? - Answer- They
receive the original deposit if the market value is below the guaranteed amount.
What happens if the market value of a seg fund exceeds the guaranteed amount at the
annuitant's death? - Answer- The beneficiary receives the market value.
Which is better for a client in a low tax bracket now but expecting high income in
retirement, TFSA or RRSP? - Answer- TFSA is usually better.
How can a client ensure their spouse receives the RRIF without tax at death? - Answer-
Name the spouse as successor annuitant on the RRIF.
, What is a Segregated Fund? - Answer- An insurance product offered exclusively by life
insurance companies that combines investment returns with a guaranteed return of
principal (75% or 100%).
Who can sell segregated funds? - Answer- Only a licensed life insurance agent; a
mutual fund license (IFIC) alone is not sufficient.
What is the key difference between Seg Funds and Mutual Funds? - Answer- Seg funds
are insurance contracts with maturity and death benefit guarantees, while mutual funds
have no guarantees.
What is a Maturity Guarantee in a Seg Fund? - Answer- On the maturity date, the
contract owner receives at least the guaranteed percentage (75% or 100%) of total
premiums deposited, regardless of market performance.
What is a Death Benefit Guarantee in a Seg Fund? - Answer- Upon the annuitant's
death, the beneficiary receives at least the guaranteed percentage (75% or 100%) of
total premiums deposited, regardless of market performance.
What is the difference between a 75/75 and a 75/100 Seg Fund? - Answer- 75/75 has a
75% maturity guarantee and 75% death benefit guarantee; 75/100 has a 75% maturity
guarantee and 100% death benefit guarantee.
What is the Reset Provision in a Seg Fund? - Answer- It allows the contract owner to
lock in the current higher market value as a new guaranteed amount, increasing the
guarantee but restarting the 10-year maturity period.
What is the trade-off of the Reset Provision? - Answer- The benefit is a higher
guaranteed amount, but the cost is that the 10-year maturity period restarts.
What is Creditor Protection in Seg Funds? - Answer- Seg fund assets may be protected
from creditors when an irrevocable family member is named as beneficiary.
What is the advantage of Bypassing Probate with Seg Funds? - Answer- Death benefit
is paid directly to the named beneficiary, avoiding probate fees and maintaining privacy.
What is the Management Expense Ratio (MER)? - Answer- The annual percentage of
fund assets charged for management, operating, and insurance costs; Seg fund MERs
are higher than comparable mutual funds.
What are Seg Fund Switches? - Answer- Moving money between funds within the same
seg fund contract, typically with a few free switches per year.
Who is the Contract Owner in a Seg Fund? - Answer- The person who holds the
contract, controls investment decisions, and pays premiums.
AND ANSWERS ALL CORRECT
What is CPP? - Answer- Earnings-based federal pension based on contributions during
working years.
When can CPP benefits start? - Answer- At age 60 (reduced) or deferred to age 70
(enhanced).
What is the difference between Defined Benefit and Defined Contribution plans? -
Answer- DB promises a specific pension amount; DC has fixed contributions with the
employee bearing investment risk.
What is a Pension Adjustment (PA)? - Answer- Reduces an employee's RRSP
contribution room to account for pension benefits earned.
What is risk tolerance? - Answer- How much volatility a client is willing to accept.
What is risk capacity? - Answer- How much risk the client can afford based on financial
situation.
What is a Straight Life Annuity? - Answer- Provides maximum income for life with no
residual to estate.
What product helps a business owner facing a lawsuit protect savings? - Answer-
Segregated fund with an irrevocable family member as beneficiary.
What happens to a beneficiary if the annuitant of a seg fund dies? - Answer- They
receive the original deposit if the market value is below the guaranteed amount.
What happens if the market value of a seg fund exceeds the guaranteed amount at the
annuitant's death? - Answer- The beneficiary receives the market value.
Which is better for a client in a low tax bracket now but expecting high income in
retirement, TFSA or RRSP? - Answer- TFSA is usually better.
How can a client ensure their spouse receives the RRIF without tax at death? - Answer-
Name the spouse as successor annuitant on the RRIF.
, What is a Segregated Fund? - Answer- An insurance product offered exclusively by life
insurance companies that combines investment returns with a guaranteed return of
principal (75% or 100%).
Who can sell segregated funds? - Answer- Only a licensed life insurance agent; a
mutual fund license (IFIC) alone is not sufficient.
What is the key difference between Seg Funds and Mutual Funds? - Answer- Seg funds
are insurance contracts with maturity and death benefit guarantees, while mutual funds
have no guarantees.
What is a Maturity Guarantee in a Seg Fund? - Answer- On the maturity date, the
contract owner receives at least the guaranteed percentage (75% or 100%) of total
premiums deposited, regardless of market performance.
What is a Death Benefit Guarantee in a Seg Fund? - Answer- Upon the annuitant's
death, the beneficiary receives at least the guaranteed percentage (75% or 100%) of
total premiums deposited, regardless of market performance.
What is the difference between a 75/75 and a 75/100 Seg Fund? - Answer- 75/75 has a
75% maturity guarantee and 75% death benefit guarantee; 75/100 has a 75% maturity
guarantee and 100% death benefit guarantee.
What is the Reset Provision in a Seg Fund? - Answer- It allows the contract owner to
lock in the current higher market value as a new guaranteed amount, increasing the
guarantee but restarting the 10-year maturity period.
What is the trade-off of the Reset Provision? - Answer- The benefit is a higher
guaranteed amount, but the cost is that the 10-year maturity period restarts.
What is Creditor Protection in Seg Funds? - Answer- Seg fund assets may be protected
from creditors when an irrevocable family member is named as beneficiary.
What is the advantage of Bypassing Probate with Seg Funds? - Answer- Death benefit
is paid directly to the named beneficiary, avoiding probate fees and maintaining privacy.
What is the Management Expense Ratio (MER)? - Answer- The annual percentage of
fund assets charged for management, operating, and insurance costs; Seg fund MERs
are higher than comparable mutual funds.
What are Seg Fund Switches? - Answer- Moving money between funds within the same
seg fund contract, typically with a few free switches per year.
Who is the Contract Owner in a Seg Fund? - Answer- The person who holds the
contract, controls investment decisions, and pays premiums.
