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Welcome

Welcome to all new LLQP E-Newsletter readers. We have put together some sample LLQP questions and answers on topics that may appear on your LLQP exam. After doing the quiz, please review topic areas you got wrong in the Advocis LLQP Study Guide.

Questions

1. Marsha, a resident of Newfoundland, redeems some of her RRSP to fund her Christmas vacation in New Zealand. She requests a withdrawal amount of $16,000. Her financial institution advises her that any cash withdrawals she makes from her RRSP is subject to tax withholding. Assuming that Marsha has no other charges applying to her withdrawal, what amount of money is Marsha going to receive?

  1. $11,200
  2. $12,000
  3. $12,800
  4. $13,200

2. Nadel moved to Calgary from Red Deer where he worked as a city health food inspector. He was hired by the City of Calgary as the head of their city health food inspection program. As part of his group package with the city, he is eligible for two times salary for basic life insurance coverage. The group plan has a $150,000 non-medical limit. Nadel’s starting salary in Calgary is $100,000 per year. He applies for $200,000 of group life insurance. His medical exam showed that he is uninsurable and does not qualify for group life insurance. How much group life insurance, if any, and under what condition is Nadel eligible for group life insurance?

  1. None
  2. $100,000 non-medical, $100,000  medical
  3. $200,000 non-medical
  4. $150,000 non-medical, $50,000 medical

3. Mrs. Fishburn is employed with the telephone company as a computer technician. She earns a salary of $55,000 yearly. Mrs. Fishburn applies for an individual disability policy with the Lucky Life Insurance Company. The insurance company’s maximum disability coverage is 66 2/3% of current income. Mrs. Fishburn purchases $3,000 per month disability income with a future purchase option (FIO) rider. The FIO rider offers Mrs. Fishburn the right, without medical evidence, to increase her monthly disability insurance coverage by $500 on each second policy anniversary date following the purchase date of the disability contract. However, Mrs. Fishburn’s employment income must justify the increase.

Mrs. Fishburn receives a job promotion with the telephone company and her salary is increased to $60,000 yearly. Mrs. Fishburn, whose health is poor, exercises her first option under the FIO rider. What is the maximum FIO benefit, if any, that Mrs. Fishburn may purchase?

  1. $234
  2. $334
  3. $434
  4. $500

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Answers

1. – a. $11,200

Rationale: In the common law provinces, withholding on cash withdrawals from RRSPs is:

10% on withdrawals up to and including $5,000;
20% on withdrawals for amounts greater than $5,000 and up to and including $15,000;
30% on withdrawals for amounts greater than $15,000.

Therefore, Marsha withdrew $16,000 x 30% = $4,800 in withholding tax.
$16,000 less $4,800 = $11,200

Reference: Module 10

2. – d. $150,000 non-medical, $50,000 medical  

Rationale: He does not have to qualify medically for group life insurance up to $150,000. He is entitled to $150,000 of coverage. He will not be able to have two times salary of group life insurance ($200,000) because he does not qualify medically for the additional $50,000.

Reference: Module 4

3. – b. $334

Rationale: Mrs. Fishburn’s salary, after her raise, is $60,000 x 66 2/3% = $40,000 / 12 months = $3,334 per month of maximum disability insurance. She currently has $3,000 per month of disability insurance and her FIO rider will allow her to increase her coverage up to $500 per month on each option date if her income justifies the increase. She can therefore pick up, without medical evidence, another $334 per month of coverage. Her income is not large enough to allow her to pick up the entire maximum of $500 per month on the option date. Her coverage therefore goes from $3,000 per month to $3,334 per month.

Reference: Module 3

All the best to you and your family for health, happiness and good fortune during the holiday season. With your hard work studying the Advocis/ Foran LLQP material, I am sure you will be rewarded with exam-writing success.

Cheers!

Doug Planche, F.L.M.I., CFP, CLU, CH.F.C.
Senior Vice President
Foran Financial Institute

Doug Planche is the instructor for the Foran LLQP 4-Day Exam Preparation Seminars. For information on the Foran LLQP seminars, please contact Foran Financial Institute at 1-800-565-0374 or visit  www.foranfinancial.com.

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Additional study aids

Preparatory Seminars and Practice Exams

LLQP Prep Seminars – A comprehensive four-day classroom-based seminar intended to prepare you for writing the certification and final licence exams: $545+ taxes
Contact Foran Financial at: 416-947-1922 or 1-800-565-0374.

Please contact Advocis Member Services at 1-877-773-6765 for more details.

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