Question 1

Dakota is the owner of Fresh Drapes, a home decoration company. She opened her business five years ago

when she quit her day job, took out loans, and put all her life savings into opening her store. Her business is

doing well, so she meets with Tanya, an insurance agent, to start investing for her retirement. After

completing a thorough needs analysis, Tanya suggests that Dakota purchase segregated funds and name her

husband as the beneficiary of the funds.

Which of the following offers the GREATEST benefit to Dakota by investing in segregated funds over other

types of investments?

Options :

A : Diversification

B : Maturity and death benefit guarantees of 100%

C : Professional management

D : Creditor protection

Answer: D

Question 2

Sasha is an employee at PranaTech. The company offers all employees a pension plan. PranaTech must contribute into the plan, but employee contributions are not mandatory. Sasha chooses where his funds will be invested.

Options :

A : Defined contribution pension plan.

B : Defined benefit pension plan.

C : Deferred profit sharing plan.

D : Group registered retirement savings plan.

Answer: A

Question 3

Paul is a self-employed props person in the film industry. A year ago, he purchased disability insurance with an accidental death and dismemberment (AD&D) rider. During a film shoot, the wood floor of the film set catches fire due to his negligence and he loses sight in one eye. Hisdoctor prescribes complete rest for five months. How will the insurer compensate Paul under the circumstances?

Options :

A :

Paul will receive a lump-sum benefit because of the loss of sight in one eye and monthly benefits for the duration of his disability.

B :

Paul will receive monthly benefits due to the loss of sight in one eye because he is automatically considered disabled under his policy.

C : Paul will only receive a lump-sum benefit for the loss of his eye; he is not disabled as he only needs rest.

D :

Paul will receive no benefits because the accident was caused by his negligence and an exclusion applies.

Answer: A

Question 4

Danny purchases a $1,000,000 whole life insurance policy. He names his three daughters, Donna-Joe, Stephanie, and Michelle, as revocable beneficiaries with each receiving one-third of the death benefit. If Michelle predeceases Danny, and Danny did not have a chance to modify his beneficiary designation, how will Danny’s death benefit be paid out?

Options :

A : Donna-Joe and Stephanie will each receive $500,000.

B : Donna-Joe and Stephanie will each receive $333,333 and Michelle's estate will receive $333,333.

C : Donna-Joe and Stephanie will each receive $333,333 and Danny's estate will receive $333,333.

D : Danny’s estate will receive the entire $1,000,000 death benefit.

Answer: A

Question 5

Johann owns a $250,000 whole life insurance policy. The policy has a cash surrender value (CSV) of $55,000 and an adjusted cost basis (ACB) of $30,000. Johann would like to cancel his policy and use the cash surrender value to fund a new business. If his marginal tax rate is 40%, how much will he have left after cancelling his policy?

Options :

A : $30,000

B : $30,000

C : $45,000

Answer: B

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