LLQP Practice Test (Life Insurance)
Free · 150 Questions.

Question 1

When an advisor reviews regulatory compliance, why is 'churning' (or twisting) in life insurance practice strictly prohibited across Canada?

• A. Replacing an existing policy primarily to generate new agent commission without client benefit under applicable rules
• B. Transferring an active insurance agency registration from one Canadian province to another
• C. Selling standard life insurance policies to immediate family members at standard premium rates
• D. Reinvesting mutual fund dividend distributions into higher-risk corporate equity investments

Explanation: Churning (or twisting) is the unethical practice of inducing a policyholder to replace an existing policy with a new one primarily for the agent to earn commissions, without a genuine benefit to the client.

Question 2

When an advisor analyzes term life coverage, what is the defining characteristic of Term Life Insurance?

• A. Provides pure temporary death protection for a specified period with no accumulated cash surrender value
• B. Guarantees permanent lifetime protection combined with mandatory dividend reinvestment in corporate equities
• C. Accumulates tax-sheltered cash values that can be accessed anytime through low-interest policy loans under applicable rules
• D. Invests fixed premiums into segregated equity funds managed directly by provincial insurance authorities

Explanation: Term insurance provides pure death benefit protection for a specified duration (e.g. 10, 20 years or to age 65). It does not accumulate cash surrender value or investment equity.

Question 3

In an individual disability income policy, what does the 'Own Occupation' definition of total disability provide to the claimant?

• A. Benefits are paid only if the insured is completely confined to an acute-care hospital or licensed nursing facility under applicable rules
• B. Benefits are paid only if the insured is unable to engage in any gainful employment suited by education and training
• C. Benefits are paid if the insured is unable to perform the essential duties of their specific regular occupation, even if working in another field
• D. Benefits require the policyholder to surrender their professional provincial licence permanently to the regulatory board

Explanation: The 'Own Occupation' definition is the most comprehensive disability definition. It pays full benefits if the claimant cannot perform the substantial duties of their specific occupation, even if they choose to work in another profession.

Question 4

When an advisor analyzes segregated fund products, what is the legal definition and structure of a Segregated Fund in Canada?

• A. An Individual Variable Insurance Contract (IVIC) issued by a life insurance company with segregated assets
• B. A collective investment pool structured as a mutual fund corporation under the Canadian Bank Act regulations
• C. A guaranteed deposit trust account administered exclusively by the Canada Revenue Agency for retirement under applicable rules
• D. A corporate debenture bond issued exclusively by municipal government public utilities to fund local debt

Explanation: A segregated fund is an Individual Variable Insurance Contract (IVIC) issued by a life insurance company. The underlying investment assets are segregated from the insurer's general corporate assets.