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(PE-02-06) LIFE Trevor is 50 years old and just started working at the Lumber Depot as a sales associate. Lumber Depot offers group life insurance to its employees, subject to a three-month probationary period and 60-day eligibility period. Trevor used to work as a roofer but is unable to climb high ladders after suffering a stroke three years ago. Due to his health issues, he would likely not be approved for an individual insurance plan. Even if he were approved, it would be very expensive. What would Trevor's entitlement to join the plan look like after satisfying the applicable probationary period? Possible Answers: Trevor would be eligible to participate in certain coverages such as dental coverage but not life coverage. He would be eligible to join the group plan regardless of his health status. All members must provide an attending physician's statement (APS) stating that there are no known health issues that would shorten the member's life span. Trevor would have to answer a few health-related questions. Based on his honest responses, he would likely be refused entry into the group plan. You did not select the correct response. The correct answer is: He would be eligible to join the group plan regardless of his health status.

(PE-02-02) LIFE Hannah bought a life insurance policy on her wife Sarah's life. The policy is for $500,000 and carries a large premium. Hannah is the main income earner, so she is concerned about not being able to pay the premium if she becomes disabled. As aresult, she would like to add a waiver of premium rider. How would the policy be underwritten? Possible Answers: Hannah is the insured because she is the one purchasing the policy. As a result, all of the underwriting would be based on her life. The life policy would be underwritten on Sarah's life. There is no need to underwrite the waiver of premium rider since itis a standard life insurance policy provision. ‘You did not select the correct response. The correct answer is: The policy would be underwritten on Sarah's life, and the waiver of premium would be underwritten on Hannah's life. Additional Learning: The insurer is accepting two risks: 1. The risk of death: If Sarah dies, the policy will pay a death benefit. Therefore, they will need to underwrite this portion of the policy on Sarah's life. 2. Waiver of premium: The premium will be waived if Hannah is disabled. Therefore, the insurer needs to assess the risk of Hannah suffering a disability.

Quiz Question Index Question 3 of 35 (ID:237121) Flag Question: ([ (PE-02-18) LIFE Kevin Short left his employer 15 years ago to launch his first and only CCPC called Short's Sports, a retail store specializing in baseball and football sporting equipment. He invested $100,000 into the venture, and the store is now worth $8,000,000 and continues to grow steadily each year. All three of Kevin's sons work in the store in various capacities, and Kevin would like to leave the business to them in equal portions upon his death. Short's Sports is the only CCPC Kevin has ever owned. Assuming a 42% marginal tax rate and an LCGE amount of $800,000, which policy would be most appropriate to cover the tax liability that would arise upon Kevin's death? Possible Answers: a) $3,550,000 non-participating WL policy with the GIB dividend option b) $1,500,000 term-to-age-65 with a GIB rider You did not select the correct response. The correct answer is: ) $1,500,000 participating WL policy with the PUA dividend option

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Quiz Question Index Question 4 of 35 (ID:246767) Flag Question: () (PE-02-17) LIFE Which of the following forms would be used in Québec and is designed to reduce the likelihood of twisting or churning? Possible Answers: Life Insurance Replacement Declaration (LIRD) Insurance of Persons Contract Risk Disclosure Statement YYou did not select the correct response. The correct answer is: Notice of Replacement of Insurance of Persons Contract Additional Learning:

Quiz Question Index Question 5 of 35 (1D:237088) (PE-02-05) LIFE Max is a member of his employer's group life insurance plan that provides coverage even into retirement, including a base benefit of $250,000 in life insurance. After retirement, coverage drops and then continues to drop when the member reaches certain age milestones. The coverage drops to 75% of the base coverage if he retires before the age of 60. It then drops to 55% of the base coverage at age 60, then to 40% of the base coverage at age 65, and at age 70, coverage will end. How much coverage would Max have at age 63 if he is retired? Possible Answers: $100,000 You did not select the correct response. The correct answer is: $137,500 Additional Learning: = Base amount x Coverage percentage =$250,000 x 55% = $137,500 Flag Question: ()

Hag Question: ] (PE-02-26) LIFE LMN Insurance Co. has issued a whole life policy to you to deliver to the applicant you have been working with, Mr. Lewis. What should you do now? Possible Answers: Meet with Mr. Lewis to review the contract in detail, explain any major provisions, have a form signed stating that there has not been any change in insurability, collect any outstanding premiums, and have him sign and date an acknowledgment stating that he has received and accepted the policy. Send the policy to Mr. Lewis by registered mail. Upon receipt of the policy, Mr. Lewis will have 10 days to review the policy. During this time, Mr. Lewis can choose to return it to the insurance company for cancellation and a full refund of all premiums paid. If the policy is not rescinded, you must meet with Mr. Lewis to review the contract in detail, explain any major provisions, have a form signed stating that there has not been any change in insurability, and collect any outstanding premiums. You did not select the correct response. The correct answer is: Meet with Mr. Lewis to review the contract in detail, explain any major provisions, have a form signed stating that there has not been any change in insurability, collect any outstanding premiums, and have him sign and date an acknowledgment stating that he has received and accepted the policy. Note: This question is testing you on the steps involved with issuing and delivering a policy. While all of the steps are necessary, none of them can be carried out if the agent does not personally deliver the policy.

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(PE-02-30) LIFE Joseph is booking a vacation to the Caribbean. There have been some recent incidents in the news about Canadian tourists being terrorized and even killed on some Caribbean islands. Although Joseph is going to be visiting a relatively safe island, he has decided to book and pay for the vacation using his gold credit card, which will cover the cost of transporting a deceased vacationer home as well as a minimal amount of life insurance to cover funeral costs. Paying for the vacation using his gold card is an example of which risk management strategy? Possible Answers: Risk avoidance Risk reduction Risk transfer Risk retention You did not select the correct response. The correct answer is: Risk transfer Additional Learning:

(PE-02-28) LIFE Colin and Sarah live in Nova Scotia and have been married since 2008. Colin eams $95,000 as a purchasing specialist, and Sarah earns $45,000 as a receptionist. Colin has a good group insurance plan through his employer, but Sarah's employer does not offer group benefits. They have a 12-year-old daughter and are expecting a second child in six weeks. Sarah will take advantage of the province's maternity leave benefit program and stay home with the baby for a period of one year. Colin is in good health and is planning to leave his current employer and start his own company within the next two months. He feels that he will be able to earn more money working for himself than for someone else. How should you advise Colin and Sarah? Possible Answers: a)If Colin does choose to leave his current employer, he and Sarah must strongly consider replacing the group insurance with individual insurance even if the premiums put stress on their budget. b) The province's EI program will provide adequate health and life insurance benefits. You did not select the correct response. The correct answer is: If Colin does choose to leave his current employer, he and Sarah must strongly consider replacing the group insurance with individual insurance even if the premiums put stress on their budget. Additional Learning: Answer b, "The province's El program will provide adequate health and life insurance benefits", is simply not true, so it can immediately be eliminated. There may be some benefits available but not nearly enough for most families.

Flag Question: ([ (PE-02-21) LIFE Laura has a $500,000 whole life policy. Three years ago, she took a policy loan of $40,000 that resulted in a policy gain of $20,000. This amount was added to her income in that year. Laura has just paid back $28,000 of the loan. How much can Laura deduct from her income this year? Possible Answers: $28,000 $48,000 $0 ‘You did not select the correct response. The correct answer is: $20,000 Additional Learning: A policy loan is considered a partial disposition of the policy and therefore results in a policy gain as per the scenario. When repaying the loan, Laura will be able to deduct the repayment from her taxable income in the year of the repayment up to the amount of the policy gain she had to report when she took out the loan, which in this case is $20,000.

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(PE-02-07) LIFE When applying for a mortgage loan on August 15!, Rudy also purchased creditor life insurance. After signing, the bank representative tore off a "certificate of insurance" and gave it to Rudy. When discussing his finances with his father, they discussed life insurance. His father cautioned Rudy that creditor insurance is more restrictive than individual life insurance policies. On August 2gth, Rudy decided he would like to cancel the creditor insurance and purchase an individual life insurance plan instead. Which of the following best describes Rudy's right to cancel creditor insurance? Possible Answers: Rudy can cancel coverage and receive his entire premium back. Rudy can cancel creditor insurance coverage at any time. Rudy cannot cancel coverage because it has been more than 20 days since he received the certificate of insurance. ‘You did not select the correct response. The correct answer is: Rudy can cancel creditor insurance coverage at any time. Addi nal Learning: If Rudy were cancelling within 20 days of receiving the certificate of insurance, he would have also received his premiums back.

Quiz Question Index Question 11 of 35 (ID:237093) Flag Question: () (PE-02-10) LIFE Scott earned $100,000 of income in 2021 and $120,000 in 2022. He died in 2022. What is the total maximum charitable donation that he can claim on his 2021 and 2022 tax returns? Possible Answers: $220,000 $100,000 ‘You did not select the correct response. The correct answer is: $220,000 Additional Learning: Ataxpayer can normally donate and claim donations of up to 75% of their net income in any given year. However, if the taxpayer has died, the 75% limit is increased to 100% in the year of death and the prior year (by filing an updated tax return for the previous year). A deceased taxpayer cannot carry unclaimed donations forward to future tax years, so a larger percentage is allowed in the last two years of the taxpayer's life.

(PE-02-14) LIFE Christina paid 31.05% of her income in taxes last year. Christina would like to purchase enough insurance to provide a lump-sum death benefit that could generate an annual net income of $95,000 in perpetuity. The investment income generated by the death benefit would be subject to a weighted average tax rate of 28.00%, and her marginal tax rate would be 39.00%. Assuming a gross (pre-tax) investment return of 5%, how much insurance would you recommend using the capitalization of income (capital retention) method? Possible Answers: $3,846,153 $3,114,754 YYou did not select the correct response. The correct answer is: $2,638,889 Additional Learning: In this question, we have been provided with a gross (pre-tax) investment return of 5%. Since we are replacing net (after-tax) income, we need to determine the net (after-tax) investment return. To do this, we must use the average (also known as the effective) tax rate because the $95,000 of income in this question would not all be taxed at the highest marginal tax rate (MTR); instead, the average tax of 28.45%, which is really the weighted average of the various tax rates on each tier of the income, is the appropriate figure to use.

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(PE-02-01) LIFE Anil owns a $500,000 whole life (WL) policy with a waiver of premium and GIB rider. The GIB allows Anil to add coverage up to 10% of the face policy on each policy anniversary date. When Anil initially applied for the policy, he was a non- smoker and in excellent health. The policy allows him to add coverage today; however, he was diagnosed with lung cancer a few months ago. How is the insurance company likely to proceed? Possible Answers: Upon completing a health declaration, Anil will be allowed to add the coverage, but the additional coverage will be rated due and attract higher premium rates. The GIB would be null and void the moment he was diagnosed with cancer because he will be deemed an uninsurable risk. You did not select the correct response. The correct answer is: The company will allow him to add the additional coverage at stated rates. Note: The GIB rider allows the insured to add coverage without evidence of insurability and regardless of his or her health. Additional Learning: Guaranteed Insurability Benefit (GIB)

(PE-02-13) LIFE Victor has several insurance needs. After performing a full insurance analysis, the agent has advised the following: Coverage of $600,000 for the first 10 years. After that, 400,000 will be required for another 10 years. At the end of 20 years, no insurance will be required. There are different ways the insurance needs can be addressed. The agent provided the following quotes: Option #1 Renewable T-10 would have a premium of $0.051 per month per $1,000 of coverage for the first 10 years. After that, the premium would increase to $0.106 per month per $1,000 of coverage Option #2 T-20 would have a premium of $0.071 per month per $1,000 of coverage for the entire 20-year period In both cases, Victor can arrange to have $600,000 in coverage for the first 10-year period and $400,000 for the second 10-year period Which strategy would have the lowest cost during the first 10 years? Note: These premiums are for learing purposes only and are not deemed to be representative of today’s rates Possible Answers: Option #2; It would cost $240 less during the first 10 years. Option #2; It would cost $5,112 less during the first 10 years. You did not select the correct response. The correct answer is Option #1; It would cost $1,440 less during the first 10 years. Additional Learning:

(PE-02-04) LIFE Toby's group life insurance plan provides life insurance coverage equal to two times his annual salary of $50,000. He also purchased two units of voluntary AD&D coverage. Each unit provides $20,000 in coverage. Toby died in a car accident. For insurance purposes, the death was not ruled accidental because Toby was intoxicated at the time of the crash (drunk driving is a criminal offence). How much will Toby's beneficiaries receive from the insurer? Possible Answers: $40,000 $140,000 $0 You did not select the correct response. The correct answer is $100,000 Additional Learning: The regular death benefit will be paid, but the accidental death component will not be paid because "commission of a crime by the insured” is an exclusion ase salary x Multiplier 50,000 x 2 100,000

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(PE-02-22) LIFE Louise bought a $100,000 whole life policy when she finished university. She is a single mother of one daughter, and she is concerned about funding her daughter's education should she die before she is able to save enough. There is very little room in Louise’s budget for additional insurance What should you recommend? Possible Answers: Afamily coverage rider A term rider Achild coverage rider Any of the above riders would be appropriate. YYou did not select the correct response. The correct answer is: A term rider Additional Learning:

Quiz Question Index Question 17 of 35 (10:237095) Flag Question: (] (PE-02-12) LIFE Fiona is taking out a loan to start a new business. The bank loan will be for $1,000,000. In order for Fiona to obtain the loan, the bank requires her to collaterally assign a life insurance policy that will pay out the loan in the event of her death. Rather than purchase a new policy, she has decided to assign an existing whole life policy that she already owns. She has assigned a policy that wil pay $1,350,000 upon death. The monthly premium is $750, of which $465 is the NCPI How much of the premium can the business deduct for tax purposes each year? Possible Answers: $6,666.30 $4,133.11 That's rightt $4,133.11 Additional Learning: The Detailed Explanation There are two key concepts that you need to understand to get this question right

Quiz Question Index Question 18 of 35 (1D:237122) Flag Question: (] (PE-02-19) LIFE You are an agent who can place business with several different insurance companies. Red is 50 years old. Ten years ago, he purchased a non-cancellable renewable and convertible (RC) T-20 policy, renewable to age 80, with a captive agent working at a different insurance company. Red isn't pleased with the service he is receiving from the other agent and has come to you to discuss his current and future insurance needs. Red has asked some questions about his existing policy. What should you tell him? Possible Answers: Coverage will no longer be available 30 years from now unless he converts the policy prior to expiry. Although the insurer must allow him to renew o convert his policy should he choose to do so, there is no way of knowing what the premiums would be at that time. You did not select the correct response. The correct answer is Coverage will no longer be available 30 years from now unless he converts the policy prior to expiry. Additional Learning: Given the information in the scenario, the only suitable answer is "Coverage will no longer be available 30 years from now". Red bought the policy 10 years ago at the age of 40 (he is 50 years old now). Aterm-20 renewable policy will allow him to renew the policy for a certain number of renewal periods, in this case to age 80, which is 30 years from now.

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(PE-02-11) LIFE Dale is a coffee shop franchisee. The business qualified as a CCPC. It was the first business Dale ever owned. His cost base of the business was $100,000, and it was eventually sold for $500,000. He was ecstatic when he learned the entire gain was tax free due to the LCGE. Given the success of his first business, Dale decided to open up another one in a larger city. It also qualifies as a CCPC. The cost of the business was $100,000. He is now selling it for $1,000,000 Assuming a 45% tax bracket, how much tax would Dale owe on the sale of the second business? Note: Assume the LCGE for qualified CCPCs is $800,000. Possible Answers: $112,500 $123,750 ‘You did not select the correct response. The correct answer is: $112,500 Additional Learning: Dale used $400,000 of his $300,000 lifetime capital gains exemption (LCGE) when he sold his first business. As a result, he has only $400,000 left Dale's capital gain is $900,000, calculated as follows: Sale proceeds — Adjusted cost base (ACB) $1,000,000 — $100,000 =5900,000 capital gain

Quiz Question Index Question 20 of 35 (1:237098) Flag Question: (] (PE-0215) LIFE Terry is the father of four children. He was recently told by an actuary that, based on his age and gender, the probability of his dying before his next birthday was 0.909% Based on this percentage, what are the approximate odds that he will die before his next birthday? “Note: This probabilty of death figure is for illustration purposes only. Possible Answers: 9.09/10 YYou did not select the correct response. The correct answer is: 1/110 Additional Learning:

Quiz Question Index Question 21 of 35 (1D:237127) Flag Question: (] (PE-02-29) LIFE Christina’s employer has just introduced a basic contributory group life and health insurance plan. The information packet she received is very detailed, and she notes that there isn't much flexibility with the plan Which of the following might Christina be able to control? 1. Premium split (employee/employer portion) 2. Beneficiary designation 3. Co-insurance factor 4. Single deductible amount 5. Membership class Possible Answers: 1,3,and4 You did not select the correct response. The correct answer is 2only Additional Learning: The only thing from this list that the member is able to control s the beneficiary designation (spouse, child, estate, etc ) Trainer's Tip: Traditional group plans offer very ittle flexbility to the members. Assume this is the case unless you are told otherwise.

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Quiz Question Index Question 22 of 35 ID237120) (PE-02:27) LIFE Life licenced agent Mike Durocher has just completed a full needs analysis on the Thompson family. Alfred Thompson eams $255,000 net income per year, and Sherri Thompson has temporarily put her career on hold to stay home to care for their two children, Jackson and Alfred Jr. The Thompsons feel that if Sherri were to predecease Alfred, he could manage the day-to-day expenses and savings needs of the family on his salary, but should Alfred die first, Sherri would need to have money made available to maintain their current standard of living. They would also like the mortgage on their home ($175,000) and their cottage ($85,000) to be paid off upon the death of the first spouse. Alfred has group life coverage equal to his salary. You have summarized the Thompson family assets along with their intentions for the assets upon Alfred's death as follows: Asset Value Intentions at Death Home $650.000 Spousal rollover RRSP (Alfred) $425,000 Spousal rollover Cottage 325,000 Sell Sports car 545,000 Sell Business $750,000 Sell Non-registered investments | $125,000 Liquidate Rental property $205.000 Sell The Thompsons would like to generate an amount equal to 75% of Alfred's current net salary in the event that Alfred predeceases Sherri. Assuming they do not wish to deplete the invested capital, and given a net investment retum of 4%, approximately how much supplemental (additional) insurance do they require on Alfred's life? Possible Answers: 2,912,000 3,33 ,000 Flag Question: ()

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Quiz Question Index Question 25 of 35 (ID:237091) Flag Question: () (PE-02.08) LIFE Kylie owns a lfe insurance policy that was last acquired after December 1, 1982, and is therefore subject to the new rules. The policy has a face value of $600,000. The ACB is $80,000, and the CSV is $105,000. Kylie has decided to reduce the face value to $200,000, which is considered to be a deemed disposition/partial surrender of the policy. Assuming she is in a 30% marginal tax bracket, how much in taxes would Kylie owe? Possible Answers: $2,475.00 $7,500.00 You did not select the correct response. The correct answer is: $5,000.25 Additional Learning: Trainer's Tip: First, assume the policy is being fully surrendered. We could easily compare the current CSV to the current ACB and realize there will be a policy gain. (The amount that would be received is more than the cost of the policy.) If there would be a policy gain for a full surrender, there would be a policy gain associated a partial surrender. Reducing Coverage Ifthe coverage is reduced on a policy, it is considered to be a partial surrender. This is because you are essentially giving up part of the policy. The tax implications vary depending on whether or not the policy was last acquired after December 1, 1982

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Quiz Question Index Harrison's father, Sisco, passed away two years ago after a long battle with cancer. Sisco had a $1,000,000 participating whole life policy that listed Harrison as the sole beneficiary. The policy was in good standing at the time of Sisco's death Harrison is surprised that the death benefit he will receive from the insurance company may not match the face value of the policy. The following figures are (PE-02-20) LIFE reported on the statement he receives from the insurance company. Question 31 of 35 (1D:237123) Flag Question: () item Amount Accrued Interest Face value $1,000,000 $40,000 Outstanding policy loan $25,000 2,000 Terminal iliness benefit $100,000 $5,000 Term addition (1-year term) $15,000 $600 How much can Harrison expect to receive from the insurance company? Possible Answers: 1,040,000 $908,000 You did not select the correct response. The correct answer is: $923,600 Note: The concept that is being tested in this question is that interest accrues on just about everything within an insurance policy, even on the death benefit if it is not paid immediately. Additional Learnin;

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Quiz Question Index Question 34 of 35 (ID:246766) Flag Question: () (PE-02-16) LIFE Vince has several life insurance needs for varying amounts and lengths of coverage. He is considering four different policies with varying features. Coincidentally, each policy results in an annual premium of $1,200. He would like to pay the premiums monthly instead of annually. Which of the following policy types would result in a monthly premium of exactly $100? Possible Answers: Aterm life policy An adjustable whole life policy Aguaranteed whole life policy You did not select the correct response. The correct answer is: Auniversal life policy Additional Learning: Modal Factors for UL You do not need to concern yourseff with the "why" here, but UL insurance policies offer modal factors that result in the periodic payment equalling the annual premium over the course of a year. This is in contrast to term and whole life polices, for which periodic payments result in a higher payment than the annual premium (as discussed below).

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