Llqp Practice Test
Free · 140 Questions.

Question 1

What is 'churning' in life insurance practice, and why is it prohibited under Canadian insurance regulations?

• A. Transferring an insurance agency licence between two Canadian provinces in accordance with established provincial regulations and guidelines.
• B. Replacing an existing policy with a new one solely to generate commission, without benefit to the client
• C. Selling insurance policies to immediate family members at a discounted premium rate according to the standard operating procedures and code rules.
• D. Reinvesting mutual fund dividends into high-risk corporate equity shares when operating in compliance with authorized requirements.

Explanation: Churning (or twisting) is the unethical practice of convincing a client to surrender an existing policy to buy a new one primarily to earn agent commission, causing financial harm to the client.

Question 2

What are the core characteristics of a Renewable and Convertible Term Life Insurance policy?

• A. Can be renewed without medical evidence and converted to permanent coverage without proof of insurability
• B. Accumulates a guaranteed cash surrender value that pays annual stock market dividends according to the standard operating procedures and code rules.
• C. Requires a fresh medical examination every five years to maintain active coverage when operating in compliance with authorized requirements.
• D. Automatically pays out double the face amount if the insured survives past age seventy in accordance with established provincial regulations and guidelines.

Explanation: Renewable term allows extension of coverage at higher age-based rates without medical underwriting; convertible term allows switching to permanent life insurance without proof of health.

Question 3

In Disability Income Insurance, what does an 'Own Occupation' definition of total disability mean?

• A. The insured must lose all vision, hearing, or use of both upper and lower limbs according to the standard operating procedures and code rules.
• B. The insured is disabled if unable to perform the essential duties of their specific regular occupation
• C. The insured must be unable to perform any occupation for which they are reasonably suited by education
• D. The insured must be confined to an accredited hospital or residential care facility as specified in the official candidate handbook and syllabus.

Explanation: 'Own occupation' is the most generous disability definition: benefits are paid if the insured cannot perform the material duties of their own regular occupation, even if working in another job.

Question 4

What unique statutory protection is offered by Segregated Funds (IVICs) under the provincial Insurance Act?

• A. Government guarantees backed by the Canada Deposit Insurance Corporation (CDIC)
• B. Maturity and death benefit guarantees, probate bypass, and potential creditor protection
• C. Exemption from all federal and provincial capital gains taxes upon fund redemption
• D. Guaranteed 10% annual compound investment capital growth regardless of markets

Explanation: Segregated funds are insurance contracts (IVICs) that offer 75% or 100% maturity/death guarantees, direct beneficiary payout bypassing probate fees, and statutory creditor protection.