Q1. Simone is an insurance agent and she has been dealing with Great Central Insurance Company for many years for the accident and sickness insurance she provides to her clients. Simone discovers that Great Central is increasing their premiums this year and she asks them why the premiums are going up. Which of the following CORRECTLY describes a factor which will lead to increased premiums?
a. the addition of exclusions to a policy
b. lower lapse rates
c. higher investment returns
d. lower morbidity rates
Q2. Bracklin, a lawyer age 55, would like an individual disability insurance policy. His main objective is to ensure that once he is issued the policy, he will always have the same coverage with the same terms until the policy matures at age 65. At age 65, he wants to have the option to convert the policy, without medical evidence, to mature at age 75. Which of the following policies BEST meet Bracklin's twin-objectives?
a. non-cancelable policy
b. cancelable policy
c. guaranteed-to-issue policy
d. guaranteed renewable policy
Q3. Breno has a group extended health coverage plan with a $3,500 annual coverage limit, a $500 deductible, and a 70% co-insurance factor. Breno incurs $2,000 of eligible medical expenses in the current year. Which of the following CORRECTLY describes Breno's benefits under his group extended health care coverage?
a. Breno must pay 70% of the first $500 of medical expenses he incurs
b. Breno must pay 30% of the first $500 of medical expenses he incurs.
c. Breno must pay $950 for his medical expenses in the current year.
d. Breno will be reimbursed for a total of $1,400 for the current year.
Q4. You meet with Una, a prospective client, for a discussion about insurance. After a thorough needs analysis, you recommend that Una purchase a cancelable individual disability insurance policy that would provide a $2,500 monthly benefit, with a 5-year benefit period, and a 60-day waiting period. Una agrees with your recommendation, however the premium is more than she can afford. Una asks you if there is any way to modify the policy to make the premium more affordable. Given Una's objective of affordability, which of the following policies would be the BEST option for Una?
a. A non-cancelable policy with a monthly benefit of $2,500, a 5-year benefit period, and a 90-day waiting period.
b. A guaranteed renewable policy with a monthly benefit of $2,500, a 5-year benefit period, and a 90-day waiting period.
c. A cancelable policy with a monthly benefit of $2,500, a 5-year benefit period, and a 90-day waiting period.
d. A guaranteed issue policy with a monthly benefit of $2,500, a 5-year benefit period, and a 90-day waiting period.
Q5. Geraldo and Suzanna work together at CasperTech and they are both software developers earning the same income. Geraldo and Suzanna are both looking to purchase disability insurance. Geraldo is 49 years old, married, and the father of two. Suzanna is 49 years old, married, and the mother of one. Both Geraldo and Suzanna are in good health and neither have a history of serious illness in their families. Which of the following statements is correct given Geraldo and Suzanna's circumstances?
i. Geraldo is more likely to become disabled for a longer period than Suzanna.
ii. Suzanna is more likely to become disabled than Geraldo.
iii. Geraldo is more likely to pay higher premiums than Suzanna.
iv. Suzanna is more likely to pay higher premiums than Geraldo.
a. i and iii
b. i and iv
c. ii and iii
d. ii and iv
Q6. Myriam works in the human resources department of a small legal and accounting firm. She meets with you to discuss the possibility of implementing a group disability benefits plan for her employees. In particular, Myriam would like to implement group long-term disability (LTD) and short-term disability (STD) plans, and would like to integrate the plans with Employment Insurance (EI) in order to stagger the benefits that will be paid by EI and the STD plan. Which of the following statements CORRECTLY describes how the group plan and EI benefits should be coordinated?
a. The STD plan will be the second payor and will have the same definition of disability as for EI, typically "any occupation".
b. In order to coordinate with EI benefits, STD benefits should resume at the beginning of week 18.
c. In order to coordinate with EI benefits, STD benefits should start after the EI waiting period of 14 days.
d. The STD plan is the second payor of benefits after EI and should begin payments after the 15 week EI benefit period.
Q7. Fryda has dental coverage under her extended health coverage. Her plan covers 80% for regular maintenance, 50% for restorative procedures, and no coverage for cosmetic procedures. Fryda goes to the dentist for a regular check-up and cleaning. During the visit, the dentist discovers that Fryda has a cracked molar. A second visit is scheduled and Fryda's cracked molar is extracted. Fryda then returns for several visits over the year to have a dental implant put in to replace her extracted molar. The total cost of her dental work is $4,525: $150 for the check-up and cleaning, $875 for the molar extraction, and $3,500 for the dental implant. If the provincial dental schedule sets the price of extractions at $750 and her dental plan considers the dental implant cosmetic, what is the total amount of Fryda's dental work that will be covered under her extended health coverage?
a. $495
b. $720
c. $1,025
d. $2,245
Q8. Connie is in the process of purchasing a house and is arranging for her mortgage financing. She would like to have some level of disability coverage and is not sure if she should purchase the mortgage disability insurance available from the bank or if she should instead purchase an individual disability policy. Which of the following statements concerning Connie's options is CORRECT?
a. Mortgage insurance has more stringent underwriting than individual insurance.
b. The beneficiary for mortgage insurance is different from an individual disability policy.
c. The benefits from mortgage insurance can be used for any purpose.
d. The definition of disability is the same for mortgage insurance and individual disability policies.
Q9. Kaitlyn earns $60,000 annually and has a disability insurance (DI) policy with a residual disability clause. The policy pays $3,500 per month, has a 0-day waiting period, and a 5-year benefit period. Kaitlyn becomes injured and qualifies for disability payments under the terms of her policy. 12 months later, she returns to work on a part time basis, earning 25% of her pre-disability income. Kaitlyn continues working part-time for 24 months and then returns to work on a full time basis. How much will Kaitlyn receive in total part-time income and benefits for the whole period that she was disabled?
a. $105,000
b. $126,000
c. $135,000
d. $156,000
Q10. Hayden has an individual disability insurance policy which has a clause for presumptive disability. He suffers from an injury which renders him irreversibly blind. What is the MOST likely outcome in this scenario?
a. The normal waiting period under the policy will apply before benefits are payable to the insured.
b. If the insured is able to return to work full-time at full salary, full benefits will not be payable.
c. Benefits will only be payable if there is evidence of loss of income as a consequence of the disability.
d. Benefits will be payable regardless of whether the disability results in a loss of earnings or not.
Q11. Xian manages security at a local casino and has an annual salary of $72,000. Xian has a disability policy that will pay 60% of her income if she becomes totally disabled and unable to work. The policy also carries a standard residual disability clause. Xian sustains an injury and after 8 months of total disability, Xian's physician allows her to return to work 3 days a week, equivalent to 60%. How much would Xian receive in disability benefits a month under her disability policy?
a. $0
b. $1,440
c. $2,400
d. $5,040
Q12. Kashi is a delivery truck driver in Winnipeg when he is involved in an automobile accident due to inclement weather. Kashi is covered by his short-term disability (STD) policy he took out in 2013. The benefit pays him 60% of his income, a monthly benefit of $2,700 at his salary of $54,000 in 2013. When Kashi makes his claim for benefits, he is now making $47,000 per year due to reduced hours. What is the MOST likely outcome?
a. Kashi's benefit will be reduced to $2,350 per month.
b. Kashi's benefit will be increased to $2,750 per month.
c. Kashi's benefit will be capped at $2,700 per month.
d. Kashi's benefit will be denied due to absence of loss.
Q13. Rumela has a disability insurance (DI) policy that pays $4,500 per month in the event of disability. The policy has a presumptive disability clause, a 90-day waiting period, and 10-year benefit period. Subsequently, Rumela is injured and becomes totally and permanently deaf. However, this does not result in a loss of earnings since Rumela's deafness does not affect her ability to function normally in her job as a computer software programmer. Which of the following statements CORRECTLY describes the outcome in this situation?
a. Rumela would not qualify for benefits under her policy.
b. Rumela would receive $4,500 per month starting immediately.
c. Rumela would receive $4,500 per month starting after 90 days.
d. Rumela's benefits will be discontinued if she returns to work.
Q14. Your client, Bjork, is purchasing a house. Although Bjork can comfortably afford the $2,000 monthly mortgage payments, she is concerned that she would not be able to afford the payments if she were to become disabled. When contemplating her insurance options, Bjork considers whether she should opt for an individual disability insurance policy or a mortgage disability insurance policy. When Bjork asks you to explain the policies, which of the following statements would be a CORRECT explanation?
a. For both an individual disability insurance policy and a mortgage disability insurance policy, Bjork must be the policyholder.
b. The premiums are typically lower for an individual disability insurance policy than for a mortgage disability insurance policy.
c. For a mortgage disability insurance policy, the institution granting the mortgage must be the beneficiary.
d. For an individual disability insurance policy, Bjork must select an "any occupation" definition of disability.
Q15. ARC Softech Inc. has 15 employees including William (owner) and Cindy (office staff). They have an existing group plan that offers basic Extended Medical and Dental coverage, without deductibles, co-insurance, or annual maximums. The plan does not cover Short-Term Disability since they are all covered by Employment Insurance (EI). The plan offers Long-Term Disability (LTD) coverage of 66 2/3% of base salary to a maximum of $2,000 per month. Everyone is covered by Worker's Compensation Benefits (WCB). Following your assessment of existing coverage, you determine that expanded coverage for ARC Softech Inc. is warranted in order to remove the maximum per month from the LTD benefit. Which of the following would be the BEST option to expand the existing coverage without increasing the total cost?
a. cancel the extended medical coverage and use the premium reductions to increase the maximum LTD benefit
b. add an annual deductible to the extended medical and dental coverage and use the premium reductions to increase the LTD maximum benefit
c. re-write the LTD to a non-occupational plan and use the premium savings to increase the maximum LTD benefit
d. cancel the dental coverage and use the premium reductions to increase the maximum LTD benefit
Q16. A prospective client, Guillermo, meets with you for an insurance needs analysis. Guillermo, a new Canadian, is a taxi driver with a spouse and 3 children. Although he hopes his income will increase at some point in the future, his income is currently quite low and he is concerned that he won't be able to afford the premiums for a disability insurance policy. As the sole provider for his family, Guillermo is worried that if he were to become disabled, the family would suffer considerable hardship. Given Guillermo's affordability needs, which of the following types of disability insurance policies would be the BEST option for Guillermo?
a. Cancelable
b. non-cancelable
c. guaranteed renewable
d. guaranteed issue
Q17. Sandra has just recently started working for GreenFields Inc., a small landscaping firm which operates solely in the city of Langley, British Columbia. As an employee of GreenFields, Sandra has joined the company group extended health insurance plan. The plan includes vision, dental, and prescription drug coverage. Which of the following statements CORRECTLY describes the tax implications of Sandra's group extended health insurance premiums and benefits?
a. Premiums paid by Greenfields would be considered a taxable benefit to Sandra.
b. Premiums paid by Greenfields are a tax deductible expense for Greenfields.
c. Premiums paid by Sandra are tax-deductible for Sandra.
d. Prescription drug benefits received by Sandra are taxable.
Q18. You have been invited to make a presentation to members of a local labour group about the risks they face in the event that they could not work for a significant period due to an accident or illness. They are all eligible for Employment Insurance (EI) and Workers' Compensation Benefits (WCB). They have a basic long term disability (LTD) plan with a 4 month waiting period and a maximum 24 month benefit. The maximum benefit amount is $2,200 per month, any occupation. Average income from employment for these employees is slightly more than $5,000 per month. Which of the risks below would be MOST applicable to these employees?
a. the risk of loss of income for the needs of the family
b. the risk of loss of purchasing power as a result of inflation
c. the risk of tax consequences
d. the risk of loss of independence
Q19. Devon is planning a trip abroad to go scuba diving in the Caribbean. When Devon asks you about travel insurance, which of the following would be a CORRECT response that you could provide to Devon?
a) Travel insurance benefits are most commonly provided on an indemnity basis.
b) Devon would typically not be covered if he was injured while scuba diving.
c) Devon would typically undergo a medical examination if he were to apply for travel insurance.
d) Most credit cards offer travel insurance that is comparable to individual insurance plans.
Q20. Sunny is the single father of two young daughters, Alanna and Adrianna. Sunny works full time and has just enough income to meet regular expenses. Sunny meets with an insurance agent to discuss his needs for accident and sickness coverage. What is Sunny's MOST significant need that would be met by accident and sickness insurance?
a. protection for income
b. likelihood of disability
c. loss of independence
d. protection for savings
Q21. Serena is a member of her employer's group disability insurance plan. Serena and her employer share the cost of the premium 50%/50% and the total premium paid on the plan to date has been $7,400. Serena made her first claim since joining that plan and received $21,000 in benefits this past year. How much of the disability income would be taxable to Serena?
a. $0
b. $3,700
c. $17,300
d. $21,000
Q22. Hassan and Sultan are married with a son, Kass age 4. Hassan has worked as a property manager with a local strata management company for 4 years. Sultan is a systems analyst in the IT Department of the municipal government. Sultan has a good group package with disability coverage that provides a level payment plan with no benefit indexing either pre-or post-disability. Hassan's employer's group plan does not offer disability coverage. Hassan has been diligently saving for retirement in his registered retirement savings plans (RRSP) and has been contributing the maximum amount each year. He has no unused RRSP contribution room. They have creditor disability coverage on their mortgage for both of them. Which of the following statements correctly describes what would happen if Hassan became disabled and could not work for 2 years as a result of his injuries?
a. Hassan would receive Employment Insurance (EI) equal to Workers Compensation (WCB), on a dollar-for-dollar basis, up to a maximum benefit of $514.
b. Hassan would receive Workers Compensation (WCB) benefits of 100% of contributions paid by the employer as a payroll tax.
c. Hassan would receive Canada Pension Plan (CPP) benefits of 100% of Hassan's pre-disability income.
d. Hassan would have to stop contributing to his RRSP after the first year of disability because he would not have earned income.
Q23. Sofia (31) is the sole proprietor of her Nail Salon and a single mother to her daughter Nina (6). She is not eligible for Employment Insurance (EI) disability benefits because she did not opt-in as a self-employed person. She has funds saved for emergencies, but she wants to consider other protection in case of disability. She approaches you about disability insurance and after assessment, Sofia qualifies for $2,650 per month in coverage. Your initial recommendation is a 30-day waiting period and a 10 year benefit period. However, the premium is $100 per month more than she feels she can afford. Which of the following is her BEST option in order to manage her premium?
a. extend the waiting period from 30 to 60 days
b. reduce the benefit amount from $2,650 to $,2000 per month
c. reduce the benefit period from 10 years to 5 years
d. try to qualify for a higher occupational class
Q24. Stu recently visited his family doctor to discuss some medical concerns. After a thorough examination, Dr. Abernathy prescribed him a medication to help treat his condition. Stu took the prescription to his pharmacist who gave him the option between the brand name drug and the generic version. Which of the following statements concerning Stu's prescription options is CORRECT?
a. If the generic drug and price is listed on the insurer's formulary list and Stu opts for the brand name drug, Stu's prescription claim will be declined in full by the insurer.
b. If the brand name drug is not listed on the insurer's formulary list and the generic drug is listed, the brand name drug is considered over the counter.
c. As a member of the group plan, Stu is entitled to choose either the generic or brand name drug and receive full coverage, regardless of the insurer's formulary list.
d. if the generic drug and price is listed on the insurer's formulary list and Stu opts for the brand name drug, Stu will pay the price difference between the generic and brand name drug.
Q25. Chunhua is a licensed insurance agent working on a number of disability insurance policies for her clients. The First National Insurance Company notifies Chunhua that the premiums will be rated for one of her disability insurance applicants. Which of the applicants below will be the MOST likely to have their premiums rated?
a. Jordao, who is 52 and diagnosed with Type 2 diabetes and whose father and grandfather became disabled from the disease.
b. Isabela, who is in remission after surgery and radiation treatment last year for breast cancer.
c. Filipe, who is a 29 year old non-smoker in good health with no family history of disease.
d. Emilia, who is 29 and in good health and whose mother passed away from complications due to Type 2 diabetes.
Q26. Your client, Hudson, meets with you for an annual review. Hudson is single with no children. He tells you that he has recently started a new position and has just become eligible to join the group extended health insurance plan. The group plan includes coverage for prescription drugs, enhanced medical and hospital care, dental care, vision care, and accidental death and dismemberment (AD&D). When Hudson asks you to explain about group coverage in more detail, which of the following would be a CORRECT explanation that you could provide to Hudson?
a. Hudson's employer will typically pay 100% of his group health insurance premiums.
b. To qualify for AD&D benefits, Hudson's death or loss must occur within one month of the accident.
c. Hudson would not be covered for services such as massage therapy and chiropractic treatment.
d. Vision care will generally be the most expensive element of Hudson's group insurance plan.
Q27. Vladimar recently applied for an individual disability insurance policy. During the application process, Vladimar did not disclose a previous injury because he believed it was not important. The policy was issued as applied for, and Vladimar accepted the policy and began paying his regular monthly premiums. Subsequently, the insurance company discovers that Vladimar failed to disclose the details of his previous injury. Given the insurance company's discovery, which of the following CORRECTLY describes what action the insurer can take as a result of Vladimar's failure to disclose his injury?
a) The insurer may void the policy on the basis of fraud, up to a maximum of 5 years from the policy issue date.
b) The insurer has a contestability period of 3 years in which it can void the policy for non-disclosure, or it can void the policy any time for fraud.
c) If the insurer discovers Vladimar's omission after 12 months from the policy issue date, the insurer cannot void the policy.
d) If the insurer discovers Vladimar's omission within 2 years of the policy issue date, the insurer can void the policy.
Q28. Clifford is an engineer earning $69,600 a year and his wife Bonita is a sales manager earning $86,400. In discussions with their insurance agent, the couple decide that if either of them were to become disabled, they would be able to live off a combined income of $9,000 a month. How much disability coverage does the couple require for Clifford in order to meet the couple's goals?
a. $1,800
b. $3,200
c. $3,480
d. $7,800
Q29. Hank works for a manufacturing firm and has a group policy that includes disability insurance. Hank was drinking and driving and drove his car into a tree. The resulting injuries are serious and will require Hank to take several months off work. Hank submits a claim for disability insurance to cover his income while he is unable to work. Which of the following will be the MOST likely outcome to Hank's disability claim?
a. the claim will not be paid due to the absence of loss
b. the insurer will reduce the monthly benefit amount
c. the insurer will increase the length of Hank's waiting period
d. the claim will not be paid due to an exclusion
Q30. Sanderson is a bus driver who earns a monthly gross income of $3,500. His wife Norma is the manager of an automotive parts store and she earns gross income of $2,250 every two weeks. The couple has living expenses, including their mortgage and property tax, of $3,000 a month. They have other debt payments totaling $900 per month and they invest $900 a month to their registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). Their remaining monthly discretionary expenses total $1,200 per month. Sanderson has an average tax rate of 20% and Norma's is 25%. What is the couple's monthly cash flow?
a. -$1,512
b. $456
c. $1,356
d. $1,656
Q31. Sofia (31) is the sole proprietor of her Nail Salon and a single mother to her daughter Nina (6). She is not eligible for Employment Insurance (EI) disability benefits because she did not opt-in as a self-employed person. She has funds saved for emergencies, but she wants to consider other protection in case of disability. She approaches you about disability insurance and after assessment, Sofia qualifies for $2,650 per month in coverage. Your initial recommendation is a 30-day waiting period and a 10 year benefit period. However, the premium is $100 per month more than she feels she can afford. Which of the following is her BEST option in order to manage her premium?
a. extend the waiting period from 30 to 60 days
b. reduce the benefit amount from $2,650 to $,2000 per month
c. reduce the benefit period from 10 years to 5 years
d. try to qualify for a higher occupational class
Q32. Barry is a group insurance agent and he has scheduled a meeting with Sven, the owner of a medium-sized manufacturing business called Fastlane Industries. Fastlane's group benefits plan is up for renewal and Sven would like to shop the market to see if there may be a better group benefits plan for his company. What is the first thing Barry needs to do before offering a group benefits plan to Sven and Fastlane?
a. structure the funding formula
b. establish proposed new coverage
c. establish the new plan design
d. review the existing coverage
Q33. Vladimar recently applied for an individual disability insurance policy. During the application process, Vladimar did not disclose a previous injury because he believed it was not important. The policy was issued as applied for, and Vladimar accepted the policy and began paying his regular monthly premiums. Subsequently, the insurance company discovers that Vladimar failed to disclose the details of his previous injury. Given the insurance company's discovery, which of the following CORRECTLY describes what action the insurer can take as a result of Vladimar's failure to disclose his injury?
a. The insurer may void the policy on the basis of fraud, up to a maximum of 5 years from the policy issue date.
b. The insurer has a contestability period of 3 years in which it can void the policy for non-disclosure, or it can void the policy any time for fraud.
c. If the insurer discovers Vladimar's omission after 12 months from the policy issue date, the insurer cannot void the policy.
d. If the insurer discovers Vladimar's omission within 2 years of the policy issue date, the insurer can void the policy.
Q34. Heather is a single mother of 2 sons, Tyler (3) and Malcolm (5). As a dentist, Heather earns $125,000 annually. As the sole income earner for the family, Heather is considering buying disability insurance in order to receive an income replacement benefit should she experience a loss of income if she becomes disabled or ill and cannot work. Heather wants the policy to pay her benefits if she cannot perform her work and functions as a dentist. Heather also wants the policy to be guaranteed in terms of both premiums and benefits for the life of the contract, with the option of converting the policy at age 65. Which of the following disability insurance policies will BEST meet Heather's objectives?
a. any occupation, guaranteed renewable
b. own occupation, guaranteed renewable
c. any occupation, non-cancelable
d. own occupation, non-cancelable
Q35. Don and Jackie are a married couple and self-employed business owners of the D&J Bakery. The bakery has enjoyed steady success for 8 years and they are at the point where they want to insure themselves to cover against a loss of income and for additional expenses incurred. They are looking for the type of policy which will kick in right away, on the first day. Which of the following statements is correct?
a. If they opt for a first day hospitalization rider, there is a waiting period of 18 to 72 hours before benefits accrue.
b. If they opt for a hospital indemnity rider, there is a waiting period of 24 to 36 hours before benefits accrue.
c. If they opt for a first day hospitalization rider, it will provide a bridge to cover hospitalization costs during the waiting period.
d. If they opt for a hospital indemnity rider, benefits would extend to the term of the base policy.
Q36. Zachery owns a 10-year term critical illness (CI) insurance policy with a $100,000 face value. The policy is a four-condition policy with a return of premium (ROP) rider. Which of the following statements CORRECTLY describes the tax consequences of the premiums paid and the benefits received by Zachery?
a. If Zachery is diagnosed with diabetes, he will receive $100,000 tax-free.
b. If Zachery receives a return of premium (ROP), it will be taxable.
c. The premiums paid by Zachery will be tax-deductible.
d. The premiums paid by Zachery will not qualify for the medical expense tax credit.
Q37. Garnet is an insurance agent working with Zula to review her insurance needs. Garnet has previously helped Zula obtain life insurance and Zula now wants to obtain accident and sickness insurance. Zula would like to retire in 10 years and considers continuity of income her main objective. Which of the following types of individual insurance BEST meets Zula's objective?
a. disability insurance
b. critical illness insurance
c. accidental death and dismemberment insurance
d. long-term care insurance
Q38. Suzanne slips and falls when carrying some heavy files which results in fractures to her leg and arm. She undergoes surgery and has been advised that her recovery will take at least 6 months during which time she will need to be off work. After surgery, Suzanne works with a physiotherapist regularly. Suzanne verbally informs her group plan insurance agent, Jessie, about the disability and instructs her to commence the processing of her disability claim. Which of the following statements regarding Suzanne's disability claim is CORRECT?
a. Suzanne must notify the insurer directly for the claims process to begin.
b. Jessie must adjudicate the claim in order for the insurer to pay or deny it.
c. Jessie's confirmation of Suzanne's injury will satisfy the insurer's claim process.
d. Suzanne must send ongoing proof of diagnosis or treatment to the insurance company.
Q39. Bracklin, a lawyer age 55, would like an individual disability insurance policy. His main objective is to ensure that once he is issued the policy, he will always have the same coverage with the same terms until the policy matures at age 65. At age 65, he wants to have the option to convert the policy, without medical evidence, to mature at age 75. Which of the following policies BEST meet Bracklin's twin-objectives?
a. non-cancelable policy
b. cancelable policy
c. guaranteed-to-issue policy
d. guaranteed renewable policy
Q40. Clifford is an engineer earning $69,600 a year and his wife Bonita is a sales manager earning $86,400. In discussions with their insurance agent, the couple decide that if either of them were to become disabled, they would be able to live off a combined income of $9,000 a month. How much disability coverage does the couple require for Clifford in order to meet the couple's goals?
a. $1,800
b. $3,200
c. $3,480
d. $7,800
Q41. Miranda fell off her bike commuting to work, shattering her shoulder and requiring surgery. Miranda had to take 6 months off work and was able to collect benefits after the 60-day waiting period on her policy. Less than six weeks after returning to work on the assembly line at a cheese grater manufacturing facility, Miranda now needs to take another 5 months off because the repetitive motion of her job has aggravated her shoulder injury. Which of the following statements is CORRECT with respect to Miranda's disability insurance benefit for the second occurrence of her shoulder injury?
a. Miranda's disability insurance policy will not likely pay an additional benefit for the same injury to her shoulder.
b. If Miranda has a recurrent disability clause, she will not have to wait the 60 days to begin receiving income.
c. If Miranda has a recurrent disability clause, she will be subject to another 60-day waiting period on the second occurrence.
d. Without the recurrent disability clause, both of Miranda's disability periods will be treated as one when determining her benefit period.
Q42. Keegan has a disability insurance (DI) policy with a 0-day waiting period and a 2-year benefit period. The policy will pay $4,000 per month and has a cost of living adjustment (COLA) rider, calculated by the simple method: the benefit is indexed by 3.5% per year based on the initial benefit payable. Keegan becomes disabled as per the terms of his policy and is off work for 36 months. What would be the total amount of benefits received by Keegan?
a. $96,000
b. $97,680
c. $147,360
d. $149,040
Q43. You meet Wayne and Penny to discuss their insurance needs. They have been married for 18 years, both are non-smokers, in good health, and in their mid 40s. Wayne operates a private equipment leasing company with a staff of 10 people who cover the labour aspects of the business. Penny is a well-established medical transcriber and works exclusively over the internet. Both Wayne and Penny's parents lived well into their 90s and there is no family history of health issues outside of the norm. They approach you about disability insurance and they are interested in "any occupation" coverage. Given the facts in this scenario, which of the following statements is correct?
a. The contract will be considered a non-standard insurable risk and will be rated.
b. The contract will be rated and premium rating will be imposed.
c. The contract will be considered a standard insurable risk and will not be rated.
d. The contract will be considered a standard insurable risk but a premium rating will be imposed.
Q44. Neeraj is a jeweller and the owner of a small incorporated custom design jewellery store. He has 3 full-time employees and has been in business for over 9 years. Everyone, including himself, are covered by Workers' Compensation (WCB). As the owner and the principal of the business, Neeraj's ability to earn an income and meet the obligations of the business rests primarily on his ability to work and generate revenue for the company. Neeraj approaches you about insurance coverage and he tells you that his priority is to ensure that the business will meet its ongoing obligations in the event that he becomes disabled or ill. Which of the following would be the BEST option for Neeraj?
a. buy/sell agreement
b. disability business overhead expense insurance
c. key person insurance
d. business loan protection disability insurance
Q45. Ian applies for an individual disability insurance (DI) policy with a return of premium (ROP) rider. During the application process, the insurer determines that Ian is overweight. After the underwriting process, the insurer issues a policy with a rating due to Ian's weight issue. Which of the following provides a CORRECT description what will happen under Ian's disability insurance policy?
a. Any amounts received by Ian as a return of premium will be tax-free.
b. If Ian suffers a disability related to his weight, no benefits will be payable.
c. Ian will receive a return of premium if the total claims exceed the premiums paid.
d. The premiums that Ian pays will be tax-deductible.
Q46. Frita is an insurance agent and her new client, Lacey, applies for critical illness insurance. During the application process, Frita notices that Lacey is extremely thin, gaunt, and frail, and she has a chronic cough throughout all of their meetings. Despite the fact that Lacey has not indicated any conditions on her application, Frita suspects that Lacey's frail appearance and symptoms most certainly indicates some sort of physical or emotional condition which has not been disclosed. Frita suspects that Lacey may have anorexia which has not been diagnosed. Which of the following is Frita's CORRECT course of action?
a. refuse to submit the application to the insurer
b. submit the application to the insurer as completed by Lacey
c. submit the application with the observation noted in the agent's comments
d. indicate anorexia and then submit the application
i. You meet with a prospective client, Phyllis (age 66), to discuss her financial and estate plan. Phyllis would like to have a better understanding of the risks facing her, and how she can properly protect herself against such risks. After your discussion, you tell Phyllis that one of the main risks facing her is longevity. Which of the following would have the GREATEST impact in determining longevity risk for Phyllis?
a. Phyllis needs to modify her home to accommodate motorized wheelchairs for her parents.
b. Phyllis suffered a broken leg several years ago and was off work for 6 months to recover.
c. Phyllis has a non-indexed defined benefit pension plan.
d. Phyllis is in great health and both of her parents are alive and over age 90.
j. Geraldo and Suzanna work together at CasperTech and they are both software developers earning the same income. Geraldo and Suzanna are both looking to purchase disability insurance. Geraldo is 49 years old, married, and the father of two. Suzanna is 49 years old, married, and the mother of one. Both Geraldo and Suzanna are in good health and neither have a history of serious illness in their families. Which of the following statements is correct given Geraldo and Suzanna's circumstances?
k. Geraldo is more likely to become disabled for a longer period than Suzanna.
ii. Suzanna is more likely to become disabled than Geraldo.
iii. Geraldo is more likely to pay higher premiums than Suzanna.
iv. Suzanna is more likely to pay higher premiums than Geraldo.
a. i and iii
b. i and iv
c. ii and iii
d. ii and iv
Q47. Ajeet has a renovation and drywall contracting business and the business is covered by a Disability Business Overhead Expense (BOE) insurance policy he purchased. Which of the following statements about Disability BOE insurance is correct?
a. If the benefit on the policy is $5,000 per month for 24 months, the benefit payment will be a fixed amount of $5,000 per month.
b. If the benefit on the policy is $5,000 per month for 24 months, the benefit payment will be a maximum reimbursement amount of $5,000 per month.
c. If the benefit on the policy is $5,000 per month for 24 months, the benefit payment will be an income replacement amount of $5,000 per month.
d. If the benefit on the policy is $5,000 per month for 24 months, the fixed benefit payment will be paid until the insured returns to work.
Q48. Sandra has just recently started working for GreenFields Inc., a small landscaping firm which operates solely in the city of Langley, British Columbia. As an employee of GreenFields, Sandra has joined the company group extended health insurance plan. The plan includes vision, dental, and prescription drug coverage. Which of the following statements CORRECTLY describes the tax implications of Sandra's group extended health insurance premiums and benefits?
a. Premiums paid by Greenfields would be considered a taxable benefit to Sandra.
b. Premiums paid by Greenfields are a tax deductible expense for Greenfields.
c. Premiums paid by Sandra are tax-deductible for Sandra.
d. Prescription drug benefits received by Sandra are taxable.
Q49. You meet with your client, Fernanda (32), for an insurance needs analysis. Based on your discussion, you recommend that Fernanda purchase a four-condition, permanent, critical illness (CI) insurance policy. Which of the following statements CORRECTLY describes Fernanda's policy?
i. Fernanda's coverage expires at age 75
ii. Fernanda's coverage expires at age 100
iii. Coronary bypass surgery is covered under Fernanda's policy
iv. Muscular dystrophy is covered under Fernanda's policy
a. i and iii
b. i and iv
c. ii and iii
d. ii and iv
Q50. Marcello is a stockbroker who earns $120,000 annually. He owns a disability insurance (DI) policy with an "own occupation" definition of disability that would pay him $6,000 per month in the event of disability. The policy has a 0-day waiting period and a 10-year benefit period. Subsequently, due to the nature of his job, Marcello suffers from stress and anxiety and is declared disabled as per the terms of his policy. After 6 months of receiving disability benefits, Marcello accepts a teaching position at his local college where he earns $5,000 per month. Which of the following statements CORRECTLY describes what the outcome will be given Marcello's circumstances?
a. Marcello's benefits will be terminated when he begins teaching.
b. Marcello's benefits will be reduced to $1,000 per month when he begins teaching.
c. Marcello's benefits will be reduced to $5,000 per month when he begins teaching.
d. Marcello will continue to receive $6,000 in benefits per month while he is teaching.
Q51. Sanderson is a bus driver who earns a monthly gross income of $3,500. His wife Norma is the manager of an automotive parts store and she earns gross income of $2,250 every two weeks. The couple has living expenses, including their mortgage and property tax, of $3,000 a month. They have other debt payments totalling $900 per month and they invest $900 a month to their registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). Their remaining monthly discretionary expenses total $1,200 per month. Sanderson has an average tax rate of 20% and Norma's is 25%. What is the couple's monthly cash flow?
a. -$1,512
b. $456
c. $1,356
d. $1,656
Q52. Matt and Crystal are married with a young family of 4 school-age children. Matt is a cargo truck driver for an airline and he has a group benefits plan which offers dental and extended health care coverage for his family. Matt's dental plan has a $100 individual deductible and a $300 family deductible. In January, Matt had a dental visit which cost $120. In February, Crystal had a dental visit which cost $150. In March, all 4 of the children went for their annual check-up which cost $400. How much of the total amount from all dental visits was refunded?
a. $270
b. $300
c. $370
d. $440
Q53. Emilio has a disability insurance policy with a recurring disability clause. As per the terms of the policy, if Emilio becomes disabled, he will receive $3,500 per month. The policy has a 60-day waiting period and a 2-year benefit period. On Dec 1, 2013, Emilio was injured in a car accident and suffered a severe neck injury. He was unable to work and qualified for disability benefit payments from his disability insurance policy. On November 1, 2014, Emilio returned to work. However, on Feb 1, 2015, Emilio's neck pain had returned and again he was unable to work. He qualified for disability payments as per the terms of his policy, and this time, Emilio remained off work until July 1, 2016. How much would Emilio receive, in total, from his disability benefit payments?
a. $21,000
b. $80,500
c. $84,000
d. $87,500
Q54. A prospective client, Guillermo, meets with you for an insurance needs analysis. Guillermo, a new Canadian, is a taxi driver with a spouse and 3 children. Although he hopes his income will increase at some point in the future, his income is currently quite low and he is concerned that he won't be able to afford the premiums for a disability insurance policy. As the sole provider for his family, Guillermo is worried that if he were to become disabled, the family would suffer considerable hardship. Given Guillermo's affordability needs, which of the following types of disability insurance policies would be the BEST option for Guillermo?
a. Cancelable
b. non-cancelable
c. guaranteed renewable
d. guaranteed issue
Q55. Hardeep is a lawyer and partner at a large law firm in Toronto. He recently purchased an individual disability insurance policy. The policy has an occupational clause and uses the "own occupation" definition for disability. Which of the following statements about Hardeep's policy is CORRECT?
a. Hardeep's policy has lower premiums than an "any occupation" policy for the same coverage.
b. Hardeep's benefits will be reduced if he returns to work in another capacity.
c. It is easier to claim benefits under Hardeep's policy than under an "any occupation" policy.
d. Hardeep's benefits will be terminated if he returns to work in another occupation.
Q56. Clients Robert (37) and Lise (29) are non-smokers and in good health. They have 2 children, Yvan (4) and Elena (6). Recently, their close friend Barry was diagnosed with multiple sclerosis and is facing major financial problems because of modifications to his home to accommodate his wheel-chair and other medical requirements. Robert and Lise approach you about coverage to protect against these types of unforeseen events and you discuss critical illness (CI) insurance. Which of the following statements about CI insurance is correct?
a. The policy will pay a benefit on account of the death of the insured from a covered condition.
b. If the covered condition is diagnosed or first manifests itself within 30 days of policy issue, it will be covered.
c. There are no qualification, waiting, or survival periods applicable to CI insurance coverage.
d. The insured must survive the diagnosis of the covered condition by at least 30 days in order to receive the benefit.
Q57. Hideki and his wife Fumiko are in their early 50s. Both sets of their parents lived into their early 90s and had to rely on family members for financial assistance for long-term care. Their priority is their daughter Teiko (22) and son Osamu (27). Hideki and Fumiko have no debts, they do not live an extravagant lifestyle, and they feel that they will have comfortable retirement incomes. However, they want to explore long-term care (LTC) insurance so that they will not be a financial burden on their children should they require long-term care. Which of the following statements about LTC insurance is correct?
a. Hideki and Fumiko can delay their decision about LTC insurance until they are 65.
b. When offered as an LTC rider on an underlying policy, the rider will have a separate premium.
c. The LTC rider on an underlying policy will not require separate medical and financial underwriting.
d. LTC benefits must be paid directly to the service provider and cannot be reimbursed to the patient.
Q58. Svetlana (45) and Petro (43) are both employed and each have their own group benefit plan that provides family coverage. Svetlana's birthday is in June and Petro's is in December. The couple has one child, Tatiana, who is 7 years old. Both Svetlana and Petro's group plans provide extended health benefits which include basic dental coverage. Svetlana's plan has a $100 deductible on dental claims and Petro's plan has a $50 deductible. In February, Tatiana has a routine check-up at her dentist. Which of the following CORRECTLY describes how their claims should be submitted to their respective insurers?
a. Svetlana and Petro's group plans will each cover half of the cost of the claim.
b. The claim should be submitted to Petro's plan first and any unpaid claims then submitted to Svetlana's insurer.
c. The claim should be submitted to Svetlana's plan first and any unpaid claims then submitted to Petro's insurer.
d. The couple can choose to submit to Petro's plan as the first payer because it has a lower deductible.
Q59. Simone is an insurance agent and she has been dealing with Great Central Insurance Company for many years for the accident and sickness insurance she provides to her clients. Simone discovers that Great Central is increasing their premiums this year and she asks them why the premiums are going up. Which of the following CORRECTLY describes a factor which will lead to increased premiums?
a. the addition of exclusions to a policy
b. lower lapse rates
c. higher investment returns
d. lower morbidity rates
Q60. Bracklin, a lawyer age 55, would like an individual disability insurance policy. His main objective is to ensure that once he is issued the policy, he will always have the same coverage with the same terms until the policy matures at age 65. At age 65, he wants to have the option to convert the policy, without medical evidence, to mature at age 75. Which of the following policies BEST meet Bracklin's twin-objectives?
a. non-cancelable policy
b. cancelable policy
c. guaranteed-to-issue policy
d. guaranteed renewable policy
Q61. You meet with Una, a prospective client, for a discussion about insurance. After a thorough needs analysis, you recommend that Una purchase a cancelable individual disability insurance policy that would provide a $2,500 monthly benefit, with a 5-year benefit period, and a 60-day waiting period. Una agrees with your recommendation, however the premium is more than she can afford. Una asks you if there is any way to modify the policy to make the premium more affordable. Given Una's objective of affordability, which of the following policies would be the BEST option for Una?
a. A non-cancelable policy with a monthly benefit of $2,500, a 5-year benefit period, and a 90-day waiting period.
b. A guaranteed renewable policy with a monthly benefit of $2,500, a 5-year benefit period, and a 90-day waiting period.
c. A cancelable policy with a monthly benefit of $2,500, a 5-year benefit period, and a 90-day waiting period.
d. A guaranteed issue policy with a monthly benefit of $2,500, a 5-year benefit period, and a 90-day waiting period.
Q62. Breno has a group extended health coverage plan with a $3,500 annual coverage limit, a $500 deductible, and a 70% co-insurance factor. Breno incurs $2,000 of eligible medical expenses in the current year. Which of the following CORRECTLY describes Breno's benefits under his group extended health care coverage?
a. Breno must pay 70% of the first $500 of medical expenses he incurs.
b. Breno must pay 30% of the first $500 of medical expenses he incurs.
c. Breno must pay $950 for his medical expenses in the current year.
d. Breno will be reimbursed for a total of $1,400 for the current year.
Q63. Geraldo and Suzanna work together at CasperTech and they are both software developers earning the same income. Geraldo and Suzanna are both looking to purchase disability insurance. Geraldo is 49 years old, married, and the father of two. Suzanna is 49 years old, married, and the mother of one. Both Geraldo and Suzanna are in good health and neither have a history of serious illness in their families. Which of the following statements is correct given Geraldo and Suzanna's circumstances?
i. Geraldo is more likely to become disabled for a longer period than Suzanna.
ii. Suzanna is more likely to become disabled than Geraldo.
iii. Geraldo is more likely to pay higher premiums than Suzanna.
iv. Suzanna is more likely to pay higher premiums than Geraldo.
a. i and iii
b. i and iv
c. ii and iii
d. ii and iv
Q64. Myriam works in the human resources department of a small legal and accounting firm. She meets with you to discuss the possibility of implementing a group disability benefits plan for her employees. In particular, Myriam would like to implement group long-term disability (LTD) and short-term disability (STD) plans, and would like to integrate the plans with Employment Insurance (EI) in order to stagger the benefits that will be paid by EI and the STD plan. Which of the following statements CORRECTLY describes how the group plan and EI benefits should be coordinated?
a. The STD plan will be the second payor and will have the same definition of disability as for EI, typically "any occupation".
b. In order to coordinate with EI benefits, STD benefits should resume at the beginning of week 18.
c. In order to coordinate with EI benefits, STD benefits should start after the EI waiting period of 14 days.
d. The STD plan is the second payor of benefits after EI and should begin payments after the 15 week EI benefit period.
Q65. Fryda has dental coverage under her extended health coverage. Her plan covers 80% for regular maintenance, 50% for restorative procedures, and no coverage for cosmetic procedures. Fryda goes to the dentist for a regular check-up and cleaning. During the visit, the dentist discovers that Fryda has a cracked molar. A second visit is scheduled and Fryda's cracked molar is extracted. Fryda then returns for several visits over the year to have a dental implant put in to replace her extracted molar. The total cost of her dental work is $4,525: $150 for the check-up and cleaning, $875 for the molar extraction, and $3,500 for the dental implant. If the provincial dental schedule sets the price of extractions at $750 and her dental plan considers the dental implant cosmetic, what is the total amount of Fryda's dental work that will be covered under her extended health coverage?
a. $495
b. $720
c. $1,025
d. $2,245
Q66. Connie is in the process of purchasing a house and is arranging for her mortgage financing. She would like to have some level of disability coverage and is not sure if she should purchase the mortgage disability insurance available from the bank or if she should instead purchase an individual disability policy. Which of the following statements concerning Connie's options is CORRECT?
A. Mortgage insurance has more stringent underwriting than individual insurance.
B. The beneficiary for mortgage insurance is different from an individual disability policy.
C. The benefits from mortgage insurance can be used for any purpose
D. The definition of disability is the same for mortgage insurance and individual disability policies.
Q67. Kaitlyn earns $60,000 annually and has a disability insurance (DI) policy with a residual disability clause. The policy pays $3,500 per month, has a 0-day waiting period, and a 5-year benefit period. Kaitlyn becomes injured and qualifies for disability payments under the terms of her policy. 12 months later, she returns to work on a part time basis, earning 25% of her pre-disability income. Kaitlyn continues working part-time for 24 months and then returns to work on a full time basis. How much will Kaitlyn receive in total part-time income and benefits for the whole period that she was disabled?
a. $105,000
b. $126,000
c. $135,000
d. $156,000
Q68. Hayden has an individual disability insurance policy which has a clause for presumptive disability. He suffers from an injury which renders him irreversibly blind. What is the MOST likely outcome in this scenario?
a. The normal waiting period under the policy will apply before benefits are payable to the insured.
b. If the insured is able to return to work full-time at full salary, full benefits will not be payable.
c. Benefits will only be payable if there is evidence of loss of income as a consequence of the disability.
d. Benefits will be payable regardless of whether the disability results in a loss of earnings or not.
Q69. Xian manages security at a local casino and has an annual salary of $72,000. Xian has a disability policy that will pay 60% of her income if she becomes totally disabled and unable to work. The policy also carries a standard residual disability clause. Xian sustains an injury and after 8 months of total disability, Xian's physician allows her to return to work 3 days a week, equivalent to 60%. How much would Xian receive in disability benefits a month under her disability policy?
a. $0
b. $1,440
c. $2,400
d. $5,040
Q70. Kashi is a delivery truck driver in Winnipeg when he is involved in an automobile accident due to inclement weather. Kashi is covered by his short-term disability (STD) policy he took out in 2013. The benefit pays him 60% of his income, a monthly benefit of $2,700 at his salary of $54,000 in 2013. When Kashi makes his claim for benefits, he is now making $47,000 per year due to reduced hours. What is the MOST likely outcome?
a. Kashi's benefit will be reduced to $2,350 per month.
b. Kashi's benefit will be increased to $2,750 per month.
c. Kashi's benefit will be capped at $2,700 per month.
d. Kashi's benefit will be denied due to absence of loss.
Q71. Rumela has a disability insurance (DI) policy that pays $4,500 per month in the event of disability. The policy has a presumptive disability clause, a 90-day waiting period, and 10-year benefit period. Subsequently, Rumela is injured and becomes totally and permanently deaf. However, this does not result in a loss of earnings since Rumela's deafness does not affect her ability to function normally in her job as a computer software programmer. Which of the following statements CORRECTLY describes the outcome in this situation?
a. Rumela would not qualify for benefits under her policy.
b. Rumela would receive $4,500 per month starting immediately.
c. Rumela would receive $4,500 per month starting after 90 days.
d. Rumela's benefits will be discontinued if she returns to work.
Q72. Your client, Bjork, is purchasing a house. Although Bjork can comfortably afford the $2,000 monthly mortgage payments, she is concerned that she would not be able to afford the payments if she were to become disabled. When contemplating her insurance options, Bjork considers whether she should opt for an individual disability insurance policy or a mortgage disability insurance policy. When Bjork asks you to explain the policies, which of the following statements would be a CORRECT explanation?
a. For both an individual disability insurance policy and a mortgage disability insurance policy, Bjork must be the policyholder.
b. The premiums are typically lower for an individual disability insurance policy than for a mortgage disability insurance policy.
c. For a mortgage disability insurance policy, the institution granting the mortgage must be the beneficiary.
d. For an individual disability insurance policy, Bjork must select an "any occupation" definition of disability.
Q73. ARC Softech Inc. has 15 employees including William (owner) and Cindy (office staff). They have an existing group plan that offers basic Extended Medical and Dental coverage, without deductibles, co-insurance, or annual maximums. The plan does not cover Short-Term Disability since they are all covered by Employment Insurance (EI). The plan offers Long-Term Disability (LTD) coverage of 66 2/3% of base salary to a maximum of $2,000 per month. Everyone is covered by Worker's Compensation Benefits (WCB). Following your assessment of existing coverage, you determine that expanded coverage for ARC Softech Inc. is warranted in order to remove the maximum per month from the LTD benefit. Which of the following would be the BEST option to expand the existing coverage without increasing the total cost?
a. acancel the extended medical coverage and use the premium reductions to increase the maximum LTD benefit
b. add an annual deductible to the extended medical and dental coverage and use the premium reductions to increase the LTD maximum benefit
c. re-write the LTD to a non-occupational plan and use the premium savings to increase the maximum LTD benefit
d. cancel the dental coverage and use the premium reductions to increase the maximum LTD benefit
Q74. A prospective client, Guillermo, meets with you for an insurance needs analysis. Guillermo, a new Canadian, is a taxi driver with a spouse and 3 children. Although he hopes his income will increase at some point in the future, his income is currently quite low and he is concerned that he won't be able to afford the premiums for a disability insurance policy. As the sole provider for his family, Guillermo is worried that if he were to become disabled, the family would suffer considerable hardship. Given Guillermo's affordability needs, which of the following types of disability insurance policies would be the BEST option for Guillermo?
a. Cancelable
b. non-cancelable
c. guaranteed renewable
d. guaranteed issue
Q75. Sandra has just recently started working for GreenFields Inc., a small landscaping firm which operates solely in the city of Langley, British Columbia. As an employee of GreenFields, Sandra has joined the company group extended health insurance plan. The plan includes vision, dental, and prescription drug coverage. Which of the following statements CORRECTLY describes the tax implications of Sandra's group extended health insurance premiums and benefits?
a. Premiums paid by Greenfields would be considered a taxable benefit to Sandra.
b. Premiums paid by Greenfields are a tax deductible expense for Greenfields.
c. Premiums paid by Sandra are tax-deductible for Sandra.
d. Prescription drug benefits received by Sandra are taxable.
Q76. You have been invited to make a presentation to members of a local labour group about the risks they face in the event that they could not work for a significant period due to an accident or illness. They are all eligible for Employment Insurance (EI) and Workers' Compensation Benefits (WCB). They have a basic long term disability (LTD) plan with a 4 month waiting period and a maximum 24 month benefit. The maximum benefit amount is $2,200 per month, any occupation. Average income from employment for these employees is slightly more than $5,000 per month. Which of the risks below would be MOST applicable to these employees?
a. the risk of loss of income for the needs of the family
b. the risk of loss of purchasing power as a result of inflation
c. the risk of tax consequences
d. the risk of loss of independence
Q77. Devon is planning a trip abroad to go scuba diving in the Caribbean. When Devon asks you about travel insurance, which of the following would be a CORRECT response that you could provide to Devon?
a. Travel insurance benefits are most commonly provided on an indemnity basis.
b. Devon would typically not be covered if he was injured while scuba diving.
c. Devon would typically undergo a medical examination if he were to apply for travel insurance.
d. Most credit cards offer travel insurance that is comparable to individual insurance plans.
Q78. Sunny is the single father of two young daughters, Alanna and Adrianna. Sunny works full time and has just enough income to meet regular expenses. Sunny meets with an insurance agent to discuss his needs for accident and sickness coverage. What is Sunny's MOST significant need that would be met by accident and sickness insurance?
a. protection for income
b. likelihood of disability
c. loss of independence
d. protection for savings
Q79. Serena is a member of her employer's group disability insurance plan. Serena and her employer share the cost of the premium 50%/50% and the total premium paid on the plan to date has been $7,400. Serena made her first claim since joining that plan and received $21,000 in benefits this past year. How much of the disability income would be taxable to Serena?
a. $0
b. $3,700
c. $17,300
d. $21,000
Q80. Hassan and Sultan are married with a son, Kass age 4. Hassan has worked as a property manager with a local strata management company for 4 years. Sultan is a systems analyst in the IT Department of the municipal government. Sultan has a good group package with disability coverage that provides a level payment plan with no benefit indexing either pre-or post-disability. Hassan's employer's group plan does not offer disability coverage. Hassan has been diligently saving for retirement in his registered retirement savings plans (RRSP) and has been contributing the maximum amount each year. He has no unused RRSP contribution room. They have creditor disability coverage on their mortgage for both of them. Which of the following statements correctly describes what would happen if Hassan became disabled and could not work for 2 years as a result of his injuries?
a. Hassan would receive Employment Insurance (EI) equal to Workers Compensation (WCB), on a dollar-for-dollar basis, up to a maximum benefit of $514.
b. Hassan would receive Workers Compensation (WCB) benefits of 100% of contributions paid by the employer as a payroll tax.
c. Hassan would receive Canada Pension Plan (CPP) benefits of 100% of Hassan's pre-disability income.
d. Hassan would have to stop contributing to his RRSP after the first year of disability because he would not have earned income.
Q81. Sofia (31) is the sole proprietor of her Nail Salon and a single mother to her daughter Nina (6). She is not eligible for Employment Insurance (EI) disability benefits because she did not opt-in as a self-employed person. She has funds saved for emergencies, but she wants to consider other protection in case of disability. She approaches you about disability insurance and after assessment, Sofia qualifies for $2,650 per month in coverage. Your initial recommendation is a 30-day waiting period and a 10 year benefit period. However, the premium is $100 per month more than she feels she can afford. Which of the following is her BEST option in order to manage her premium?
a. extend the waiting period from 30 to 60 days
b. reduce the benefit amount from $2,650 to $,2000 per month
c. reduce the benefit period from 10 years to 5 years
d. try to qualify for a higher occupational class
Q82. Stu recently visited his family doctor to discuss some medical concerns. After a thorough examination, Dr. Abernathy prescribed him a medication to help treat his condition. Stu took the prescription to his pharmacist who gave him the option between the brand name drug and the generic version. Which of the following statements concerning Stu's prescription options is CORRECT?
a. If the generic drug and price is listed on the insurer's formulary list and Stu opts for the brand name drug, Stu's prescription claim will be declined in full by the insurer.
b. If the brand name drug is not listed on the insurer's formulary list and the generic drug is listed, the brand name drug is considered over the counter.
c. As a member of the group plan, Stu is entitled to choose either the generic or brand name drug and receive full coverage, regardless of the insurer's formulary list.
d. If the generic drug and price is listed on the insurer's formulary list and Stu opts for the brand name drug, Stu will pay the price difference between the generic and brand name drug.
Q83. Chunhua is a licensed insurance agent working on a number of disability insurance policies for her clients. The First National Insurance Company notifies Chunhua that the premiums will be rated for one of her disability insurance applicants. Which of the applicants below will be the MOST likely to have their premiums rated?
a. Jordao, who is 52 and diagnosed with Type 2 diabetes and whose father and grandfather became disabled from the disease.
b. Isabela, who is in remission after surgery and radiation treatment last year for breast cancer.
c. Filipe, who is a 29 year old non-smoker in good health with no family history of disease.
d. Emilia, who is 29 and in good health and whose mother passed away from complications due to Type 2 diabetes.
Q84. Your client, Hudson, meets with you for an annual review. Hudson is single with no children. He tells you that he has recently started a new position and has just become eligible to join the group extended health insurance plan. The group plan includes coverage for prescription drugs, enhanced medical and hospital care, dental care, vision care, and accidental death and dismemberment (AD&D). When Hudson asks you to explain about group coverage in more detail, which of the following would be a CORRECT explanation that you could provide to Hudson?
a. Hudson's employer will typically pay 100% of his group health insurance premiums.
b. To qualify for AD&D benefits, Hudson's death or loss must occur within one month of the accident.
c. Hudson would not be covered for services such as massage therapy and chiropractic treatment.
d. Vision care will generally be the most expensive element of Hudson's group insurance plan.
Q85. Vladimar recently applied for an individual disability insurance policy. During the application process, Vladimar did not disclose a previous injury because he believed it was not important. The policy was issued as applied for, and Vladimar accepted the policy and began paying his regular monthly premiums. Subsequently, the insurance company discovers that Vladimar failed to disclose the details of his previous injury. Given the insurance company's discovery, which of the following CORRECTLY describes what action the insurer can take as a result of Vladimar's failure to disclose his injury?
a. The insurer may void the policy on the basis of fraud, up to a maximum of 5 years from the policy issue date.
b. The insurer has a contestability period of 3 years in which it can void the policy for non-disclosure, or it can void the policy any time for fraud.
c. If the insurer discovers Vladimar's omission after 12 months from the policy issue date, the insurer cannot void the policy.
d. If the insurer discovers Vladimar's omission within 2 years of the policy issue date, the insurer can void the policy.
Q86. Clifford is an engineer earning $69,600 a year and his wife Bonita is a sales manager earning $86,400. In discussions with their insurance agent, the couple decide that if either of them were to become disabled, they would be able to live off a combined income of $9,000 a month. How much disability coverage does the couple require for Clifford in order to meet the couple's goals?
a. $1,800
b. $3,200
c. $3,480
d. $7,800
Q87. Hank works for a manufacturing firm and has a group policy that includes disability insurance. Hank was drinking and driving and drove his car into a tree. The resulting injuries are serious and will require Hank to take several months off work. Hank submits a claim for disability insurance to cover his income while he is unable to work. Which of the following will be the MOST likely outcome to Hank's disability claim?
a. the claim will not be paid due to the absence of loss
b. the insurer will reduce the monthly benefit amount
c. the insurer will increase the length of Hank's waiting period
d. the claim will not be paid due to an exclusion
Q88. Sanderson is a bus driver who earns a monthly gross income of $3,500. His wife Norma is the manager of an automotive parts store and she earns gross income of $2,250 every two weeks. The couple has living expenses, including their mortgage and property tax, of $3,000 a month. They have other debt payments totalling $900 per month and they invest $900 a month to their registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). Their remaining monthly discretionary expenses total $1,200 per month. Sanderson has an average tax rate of 20% and Norma's is 25%. What is the couple's monthly cash flow?
a. -$1,512
b. $456
c. $1,356
d. $1,656
Q89. Simone is an insurance agent and she has been dealing with Great Central Insurance Company for many years for the accident and sickness insurance she provides to her clients. Simone discovers that Great Central is increasing their premiums this year and she asks them why the premiums are going up. Which of the following CORRECTLY describes a factor which will lead to increased premiums?
a. the addition of exclusions to a policy
b. lower lapse rates
c. higher investment returns
d. lower morbidity rates
Q90. Devon is planning a trip abroad to go scuba diving in the Caribbean. When Devon asks you about travel insurance, which of the following would be a CORRECT response that you could provide to Devon?
a. Travel insurance benefits are most commonly provided on an indemnity basis.
b. Devon would typically not be covered if he was injured while scuba diving.
c. Devon would typically undergo a medical examination if he were to apply for travel insurance.
d. Most credit cards offer travel insurance that is comparable to individual insurance plans.
Q91. You have been invited to make a presentation to members of a local labour group about the risks they face in the event that they could not work for a significant period due to an accident or illness. They are all eligible for Employment Insurance (EI) and Workers' Compensation Benefits (WCB). They have a basic long term disability (LTD) plan with a 4 month waiting period and a maximum 24 month benefit. The maximum benefit amount is $2,200 per month, any occupation. Average income from employment for these employees is slightly more than $5,000 per month. Which of the risks below would be MOST applicable to these employees?
a. the risk of loss of income for the needs of the family
b. the risk of loss of purchasing power as a result of inflation
c. the risk of tax consequences
d. the risk of loss of independence
Q92. Kashi is a delivery truck driver in Winnipeg when he is involved in an automobile accident due to inclement weather. Kashi is covered by his short-term disability (STD) policy he took out in 2013. The benefit pays him 60% of his income, a monthly benefit of $2,700 at his salary of $54,000 in 2013. When Kashi makes his claim for benefits, he is now making $47,000 per year due to reduced hours. What is the MOST likely outcome?
a. Kashi's benefit will be reduced to $2,350 per month.
b. Kashi's benefit will be increased to $2,750 per month.
c. Kashi's benefit will be capped at $2,700 per month.
d. Kashi's benefit will be denied due to absence of loss.
Q93. Bo was recently hired at Franny's Fabrics, a national knitting and sewing supply warehouse. Bo was pleased to learn that she would be entitled to Franny's comprehensive group plan which includes disability coverage. During the weekend after her start date, Bo fell off her bike and broke her arm. She underwent emergency surgery and was off work for 4 weeks. Bo submitted claims for short-term disability and prescription medicines, but both claims were denied. Which of the following is the CORRECT reason why Bo's claims were denied?
a. Bo had not yet completed the contestability period.
b. Bo had not yet completed the qualification period.
c. Bo had not yet completed the waiting period.
d. Bo had not yet completed the grace period.
Q94. Harry and Colleen are in their late 40s and married. They are both employed in the computer industry, Colleen working on a Help Desk and Harry as an installer of mainframes. Colleen is a member of her employer's defined benefit pension plan (DBPP) and Harry has a defined contribution pension plan (DCPP) with his employer. They both have very good group plans that include close to maximum disability benefits, non-taxable, and no indexing. Harry and Colleen believe that they don't need to worry about saving for retirement because they have their employer pensions. If they were to become disabled and could not work for 2 years as a result, which of the following statements concerning their pensions is correct?
a. while pension contributions would stop, they could contribute to a registered disability savings plan (RDSP)
b. pension contributions would not be interrupted by a period of disability
c. pension contributions would stop in the event of disability because there would not be earned income to base contributions on
d. while pension contributions would stop, they could contribute to a personal registered pension plan (PRPP)
Q95. Sunny is the single father of two young daughters, Alanna and Adrianna. Sunny works full time and has just enough income to meet regular expenses. Sunny meets with an insurance agent to discuss his needs for accident and sickness coverage. What is Sunny's MOST significant need that would be met by accident and sickness insurance?
a. protection for income
b. likelihood of disability
c. loss of independence
d. protection for savings
Q96. Svetlana (45) and Petro (43) are both employed and each have their own group benefit plan that provides family coverage. Svetlana's birthday is in June and Petro's is in December. The couple has one child, Tatiana, who is 7 years old. Both Svetlana and Petro's group plans provide extended health benefits which include basic dental coverage. Svetlana's plan has a $100 deductible on dental claims and Petro's plan has a $50 deductible. In February, Tatiana has a routine check-up at her dentist. Which of the following CORRECTLY describes how their claims should be submitted to their respective insurers?
a. Svetlana and Petro's group plans will each cover half of the cost of the claim.
b. The claim should be submitted to Petro's plan first and any unpaid claims then submitted to Svetlana's insurer.
c. The claim should be submitted to Svetlana's plan first and any unpaid claims then submitted to Petro's insurer.
d. The couple can choose to submit to Petro's plan as the first payer because it has a lower deductible
Q97. Gillian (42) has asked you about Critical Illness (CI) insurance. She understands the basic concept but she is unsure whether she needs the coverage given she has more than $325,000 in her registered retirement savings plans (RRSPs). Gillian believes that her RRSP savings will be more than ample to cover the costs of care should she become critically ill. Which of the following statements is correct?
a. Funding care for a critical illness from the RRSP would be tax efficient because income would be low.
b. Funding care for a critical illness from the RRSP would be less advantageous from a tax perspective
c. Funding care for a critical illness from the RRSP is not permitted unless hardship can be proven.
d. Funding care for a critical illness from the RRSP is the best option, regardless if the client has CI insurance.
Q98. Svana would like to purchase an individual insurance policy. After a discussion and thorough needs analysis, you determine that both a non-cancelable policy and a guaranteed renewable policy would meet Svana's needs. Eager to learn more, Svana asks you to explain the main differences between a non-cancelable policy and a guaranteed renewable policy. Which of the following statements is a CORRECT explanation that you can provide to Svana?
a. Guaranteed renewable policies typically provide coverage to age 60, whereas non-cancelable policies typically provide coverage to age 65.
b. Non-cancelable policy premiums can never be increased, whereas guaranteed renewable policy premiums can be increased.
c. For non-cancelable policies, any changes to the policy must be communicated to you in writing a minimum of 30 days in advance.
d. For a guaranteed renewable policy, only the policyholder has the right to modify any of the terms and conditions of the policy.
Q99. Sofia (31) is the sole proprietor of her Nail Salon and a single mother to her daughter Nina (6). She is not eligible for Employment Insurance (EI) disability benefits because she did not opt-in as a self-employed person. She has funds saved for emergencies, but she wants to consider other protection in case of disability. She approaches you about disability insurance and after assessment, Sofia qualifies for $2,650 per month in coverage. Your initial recommendation is a 30-day waiting period and a 10 year benefit period. However, the premium is $100 per month more than she feels she can afford. Which of the following is her BEST option in order to manage her premium?
a. extend the waiting period from 30 to 60 days
b. reduce the benefit amount from $2,650 to $,2000 per month
c. reduce the benefit period from 10 years to 5 years
d. try to qualify for a higher occupational class
Q100. You meet with a prospective client, Phyllis (age 66), to discuss her financial and estate plan. Phyllis would like to have a better understanding of the risks facing her, and how she can properly protect herself against such risks. After your discussion, you tell Phyllis that one of the main risks facing her is longevity. Which of the following would have the GREATEST impact in determining longevity risk for Phyllis?
a. Phyllis needs to modify her home to accommodate motorized wheelchairs for her parents.
b. Phyllis suffered a broken leg several years ago and was off work for 6 months to recover.
c. Phyllis has a non-indexed defined benefit pension plan.
d. Phyllis is in great health and both of her parents are alive and over age 90.
Q101. Your client Claude is a senior executive and he has approached you about additional disability insurance coverage. In your analysis of Claude's insurance needs, you determine that he will need an "own occupation" policy given his executive status. Before you can determine or recommend a solution, you assess Claude's existing coverage from all sources. In your assessment of his existing coverage, which of the following would generally provide coverage on an "own occupation" basis?
a. Canada Pension Plan (CPP) coverage.
b. Employment Insurance (EI) coverage
c. Creditor Disability insurance coverage
d. short-term disability coverage under his group plan.
Q102. Geraldo and Suzanna work together at CasperTech and they are both software developers earning the same income. Geraldo and Suzanna are both looking to purchase disability insurance. Geraldo is 49 years old, married, and the father of two. Suzanna is 49 years old, married, and the mother of one. Both Geraldo and Suzanna are in good health and neither have a history of serious illness in their families. Which of the following statements is correct given Geraldo and Suzanna's circumstances?
i. Geraldo is more likely to become disabled for a longer period than Suzanna.
ii. Suzanna is more likely to become disabled than Geraldo.
iii. Geraldo is more likely to pay higher premiums than Suzanna.
iv. Suzanna is more likely to pay higher premiums than Geraldo.
a. i and iii
b. i and iv
c. ii and iii
d. ii and iv
Q103. Chantal and Didier have been married for 17 years and are in their early 40s. Both work in the private sector and have good benefit plans which provide disability insurance. Chantal's sister was recently diagnosed with cervical cancer and 3 years ago, Didier's good friend Denis was in a vehicle accident and is now a paraplegic. As a result of these events, Chantal and Didier are concerned about whether their group disability benefits will be sufficient and they want to explore critical illness (CI) insurance. Which of the following statements about critical illness (CI) insurance is correct?
a. In the event that the insured is diagnosed with a covered condition, benefits are paid in a lump-sum and can be used for any purpose.
b. In the event that the insured is diagnosed with a covered condition, expenses for assisted living or home care will be covered.
c. In the event that the insured is diagnosed with a covered condition, monthly income benefits will be paid to the insured.
d. In the event that the insured is diagnosed with a covered condition, benefits are paid to the service provider or assisted living facility.
Q104. Garnet is an insurance agent working with Zula to review her insurance needs. Garnet has previously helped Zula obtain life insurance and Zula now wants to obtain accident and sickness insurance. Zula would like to retire in 10 years and considers continuity of income her main objective. Which of the following types of individual insurance BEST meets Zula's objective?
a. disability insurance
b. critical illness insurance
c. accidental death and dismemberment insurance
d. long-term care insurance
Q105. Neo wants disability insurance in order to protect his income in case he is injured and unable to work. Neo has a friend who sustained an extended disability and found it difficult near the end of the benefit period because she felt that the fixed monthly benefit she was receiving was not able to purchase the same amount of goods as when she first started receiving the income. Neo asks his insurance agent, Moustafa, if there is anything that can be added to the policy to ensure that this would not happen to him. Which of the following would be the CORRECT option that would address Neo's objective?
a. add a cost of living adjustment
b. add a future purchase option
c. add a return of premium feature
d. add a premium rating rider
Q106. Lucille, age 50, owns a permanent critical illness (CI) insurance policy with a $50,000 face value. The policy effective date is February 1st. On June 15th of the same year, Lucille is diagnosed with terminal cancer. Lucille dies the following month, on July 5th. Which of the following CORRECTLY describes what the outcome would be given Lucille's circumstances?
a. No benefit would be payable because Lucille was diagnosed during the qualification period.
b. The insurance company would pay a benefit of $50,000 to Lucille's beneficiary.
c. The insurance company would reduce the benefit to $30,000 due to the policy's waiting period.
d. No benefit would be payable because Lucille died during the waiting period.
Q107. You meet with your client, Fernanda (32), for an insurance needs analysis. Based on your discussion, you recommend that Fernanda purchase a four-condition, permanent, critical illness (CI) insurance policy. Which of the following statements CORRECTLY describes Fernanda's policy?
i. Fernanda's coverage expires at age 75
ii. Fernanda's coverage expires at age 100
iii. Coronary bypass surgery is covered under Fernanda's policy
iv. Muscular dystrophy is covered under Fernanda's policy
a. i and iii
b. i and iv
c. ii and iii
d. ii and iv
Q108. Vladimar recently applied for an individual disability insurance policy. During the application process, Vladimar did not disclose a previous injury because he believed it was not important. The policy was issued as applied for, and Vladimar accepted the policy and began paying his regular monthly premiums. Subsequently, the insurance company discovers that Vladimar failed to disclose the details of his previous injury. Given the insurance company's discovery, which of the following CORRECTLY describes what action the insurer can take as a result of Vladimar's failure to disclose his injury?
a. The insurer may void the policy on the basis of fraud, up to a maximum of 5 years from the policy issue date.
b. The insurer has a contestability period of 3 years in which it can void the policy for non-disclosure, or it can void the policy any time for fraud.
c. If the insurer discovers Vladimar's omission after 12 months from the policy issue date, the insurer cannot void the policy.
d. If the insurer discovers Vladimar's omission within 2 years of the policy issue date, the insurer can void the policy.
Q109. Breno has a group extended health coverage plan with a $3,500 annual coverage limit, a $500 deductible, and a 70% co-insurance factor. Breno incurs $2,000 of eligible medical expenses in the current year. Which of the following CORRECTLY describes Breno's benefits under his group extended health care coverage?
a. Breno must pay 70% of the first $500 of medical expenses he incurs.
b. Breno must pay 30% of the first $500 of medical expenses he incurs.
c. Breno must pay $950 for his medical expenses in the current year.
d. Breno will be reimbursed for a total of $1,400 for the current year.
Q110. A prospective client, Guillermo, meets with you for an insurance needs analysis. Guillermo, a new Canadian, is a taxi driver with a spouse and 3 children. Although he hopes his income will increase at some point in the future, his income is currently quite low and he is concerned that he won't be able to afford the premiums for a disability insurance policy. As the sole provider for his family, Guillermo is worried that if he were to become disabled, the family would suffer considerable hardship. Given Guillermo's affordability needs, which of the following types of disability insurance policies would be the BEST option for Guillermo?
a. cancelable
b. non-cancelable
c. guaranteed renewable
d. guaranteed issue
Q111. Marty would like disability insurance to protect his income in case he is unable to work. Marty is the sole income earner for his family and while he has short term coverage through work, he does not currently have any long term disability insurance. Marty meets with his insurance agent Jeb who recommends a policy with a monthly benefit amount equal to 60% of his current gross income, a 3 year benefit period, and a 60 day waiting period.. Marty feels that the coverage is fair, however he is not sure that he can afford the premium amount. Given Marty's desire for a more affordable premium, which of the following four policies will be the BEST policy to meet Marty's needs and budget?
a. A policy with a monthly benefit of 50% of income, a 3 year benefit period, and a 60 day waiting period.
b. A policy with a monthly benefit of 50% of income, a 2 year benefit period, and a 60 day waiting period.
c. A policy with a monthly benefit of 60% of income, a 3 year benefit period, and a 90 day waiting period.
d. A policy with a monthly benefit of 60% of income, a 2 year benefit period, and a 60 day waiting period.
Q112. Agrograin Industries Inc. of Saskatchewan has over 100 employees and offers a group benefits and insurance plan. Premiums for the group insurance plan are set and if the claims experience of the group is better than the group premiums were priced for, Agrograin receives a partial refund of its premiums paid. If the actual experience is worse than anticipated, the insurance company has the opportunity to recoup its losses from Agrograin at the time of contract renewal. Which type of funding formula does Agrograin have for its group insurance plan?
a. administrative services only
b. refund accounting
c. non-refund accounting
d. non-participation
Q113. Fryda has dental coverage under her extended health coverage. Her plan covers 80% for regular maintenance, 50% for restorative procedures, and no coverage for cosmetic procedures. Fryda goes to the dentist for a regular check-up and cleaning. During the visit, the dentist discovers that Fryda has a cracked molar. A second visit is scheduled and Fryda's cracked molar is extracted. Fryda then returns for several visits over the year to have a dental implant put in to replace her extracted molar. The total cost of her dental work is $4,525: $150 for the check-up and cleaning, $875 for the molar extraction, and $3,500 for the dental implant. If the provincial dental schedule sets the price of extractions at $750 and her dental plan considers the dental implant cosmetic, what is the total amount of Fryda's dental work that will be covered under her extended health coverage?
A. $496
B. $720
C. $1,025
D. $2,245
Q114. Nubia works at a small engineering firm, ENG Inc. Although Nubia is not a shareholder of the firm, she is considered a key employee who is vital to the success of the firm. To protect itself in the event of Nubia's disability, ENG Inc. purchases a disability insurance policy based on Nubia's life. Based on this information, which of the following statements CORRECTLY describes the tax treatment of the premiums and benefits?
i. If ENG Inc. pays the policy premiums and is the beneficiary, the premiums are a tax-deductible business expense for ENG Inc.
ii. If ENG Inc. pays the policy premiums and Nubia is the beneficiary, the premiums are a tax-deductible business expense for ENG Inc.
iii. If ENG Inc. pays the policy premiums and is the beneficiary, the benefits received by ENG Inc. will be taxable.
iv. If ENG Inc. pays the policy premiums and Nubia is the beneficiary, the premiums are a taxable benefit to Nubia.
a. i and iii
b. i and iv
c. ii and iv
d. ii and iii
Q115. Aadip runs a personal concierge service business that caters to career-oriented couples who don't have time to handle household duties and errands. His work does not fit into any neatly categorized occupation or class. While his business and income is growing, he is concerned about the premium costs of individual disability insurance. Aadip wants to obtain the maximum benefit while keeping premiums lower. After considering Aadip's priorities, you recommend a policy with a somewhat longer waiting period than is standard and when you present it to Aadip, he expresses dissatisfaction and tells you that the policy is not acceptable. Which of the following is the correct action that should be taken?
a. The policy recommended is the best option for Aadip and it is therefore a "take it or leave it" proposition.
b. The policy should be revised so that the actual amount of the benefit is reduced, the cost of the premium is managed, and the waiting period is shortened.
c. The policy should be revised so that it offers the coverage that Aadip needs as closely as possible, but manages the premium by shortening the benefit period.
d. The policy recommended should be returned to the underwriting department so that Aadip's policy can be rated and the premiums can be lowered.
Q116. Steve makes $82,000 in salary and he has qualified for annual bonuses in each of the last 2 years, $4,500 and $7,500 respectively. His group benefits provide Long Term Disability (LTD) benefits after 4 months off work, continuing for 2 years based on an "own occupation" definition of disability. Steve approaches you because he feels he needs more protection since his wife Edie is a stay-at-home mom without coverage. Which of the items below must you collect in respect of Steve's income and existing coverage?
a. a copy of Steve's Group Benefits Booklet and his T1 Income Tax Returns and Notice of Assessments for the past 2 years
b. a complete statement of Steve's assets and liabilities including those from the mortgage lender and for any credit cards
c. a copy of Steve's employer's personnel file confirming his occupational risk category from Workers Compensation
d. a complete profile of Steve's estate plan and will
Q117. George, age 79, has a long-term care policy for $100,000. He suffers a heart attack which restricts his mobility and he is confined to his home for 3 months. During this period, George receives in-home services from a nurse and a physiotherapist. 4 months later, George falls in the kitchen and breaks his wrist. George's eyesight is also failing, so his son Derek finds a placement for his father in a nursing home. Which of the following CORRECTLY describes how the benefits will be paid from George's long-term care policy?
a. The benefits for the nurse will be paid directly to the nursing agency.
b. The benefits for the physiotherapist will be paid at the maximum rather than actual amount.
c. The benefits for the home care services will be paid on an indemnity basis.
d. The benefits for the nursing home will be paid directly to the facility.
Q118. Simone, is a group insurance agent with Westcare Health. He is in the process of proposing a new group disability plan for Pedal to the Metal (PTM), a medium sized chain of bicycle repair shops. The plan will include critical illness (CI) coverage. Which of the following factors should Simone review and compare between the old plan and new plan?
i. maximum benefits
ii. covered conditions
iii. deductible
iv. amount of coverage
a. i and ii
b. i and iii
c. ii and iv
d. iii and iv
Q119. Jensen is the sole owner and operator of a small embroidering firm called "Stitch This" which designs and creates promotional goods for other businesses and sports teams. "Stitch This" has three employees who work under Jensen's direction. Jensen is concerned that if he were to become disabled and unable to work for a period of time, not only would he lose his income, but his business may not be able to survive considering the ongoing operating expenses. Which of the following insurance policies would BEST address the needs of "Stitch This"?
a. disability business overhead expense insurance
b. key person disability insurance
c. business loan protection disability insurance
d. disability buyout insurance
Q120. Emilio has a disability insurance policy with a recurring disability clause. As per the terms of the policy, if Emilio becomes disabled, he will receive $3,500 per month. The policy has a 60-day waiting period and a 2-year benefit period. On Dec 1, 2013, Emilio was injured in a car accident and suffered a severe neck injury. He was unable to work and qualified for disability benefit payments from his disability insurance policy. On November 1, 2014, Emilio returned to work. However, on Feb 1, 2015, Emilio's neck pain had returned and again he was unable to work. He qualified for disability payments as per the terms of his policy, and this time, Emilio remained off work until July 1, 2016. How much would Emilio receive, in total, from his disability benefit payments?
a. $21,000
b. $80,500
c. $84,000
d. $87,500
Q121. Milos has a gross salary of $6,000 per month as the manager of a large commercial bakery. Milos has a group disability plan through work that has a benefit of $3,500 (58% of salary) and he would like to purchase an individual disability policy from another insurer with a benefit of $3,500. If Milos were to purchase the new policy and subsequently become disabled and unable to work, what is the benefit amount Milos will receive from each plan?
a. Milos would receive a benefit of $2,550 from each of the plans.
b. Milos would receive a benefit of $3,500 from one plan and $1,600 from the other.
c. Milos would receive a benefit of $3,500 from one plan and $2,550 from the other.
d. Milos would receive a benefit of $3,500 from each of the plans.
Q122. Frita is an insurance agent and her new client, Lacey, applies for critical illness insurance. During the application process, Frita notices that Lacey is extremely thin, gaunt, and frail, and she has a chronic cough throughout all of their meetings. Despite the fact that Lacey has not indicated any conditions on her application, Frita suspects that Lacey's frail appearance and symptoms most certainly indicates some sort of physical or emotional condition which has not been disclosed. Frita suspects that Lacey may have anorexia which has not been diagnosed. Which of the following is Frita's CORRECT course of action?
a. refuse to submit the application to the insurer
b. submit the application to the insurer as completed by Lacey
c. submit the application with the observation noted in the agent's comments
d. indicate anorexia and then submit the application
Q123. Sanderson is a bus driver who earns a monthly gross income of $3,500. His wife Norma is the manager of an automotive parts store and she earns gross income of $2,250 every two weeks. The couple has living expenses, including their mortgage and property tax, of $3,000 a month. They have other debt payments totalling $900 per month and they invest $900 a month to their registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). Their remaining monthly discretionary expenses total $1,200 per month. Sanderson has an average tax rate of 20% and Norma's is 25%. What is the couple's monthly cash flow?
a. -$1,512
b. $456
c. $1,356
d. $1,656
Q124. Your client, Lucas, has just started working at a firm which offers a group benefits package including short-term disability (STD) and long-term disability (LTD) benefits. Lucas has never been a member of a group benefits plan before. When Lucas asks you to explain the details of the group LTD and STD plans, which of the following is a CORRECT response you can offer to Lucas?
a. If the LTD premiums are paid the employer, any benefits Lucas receives will be taxable.
b) The LTD premiums will typically be paid in full by the employer.
c) The STD premiums will typically be paid in full by Lucas.
d) If the STD premiums are paid by the employer, any benefits Lucas receives will be non-taxable.
Q125. Hayden has an individual disability insurance policy which has a clause for presumptive disability. He suffers from an injury which renders him irreversibly blind. What is the MOST likely outcome in this scenario?
a. The normal waiting period under the policy will apply before benefits are payable to the insured.
b. If the insured is able to return to work full-time at full salary, full benefits will not be payable.
c. Benefits will only be payable if there is evidence of loss of income as a consequence of the disability.
d. Benefits will be payable regardless of whether the disability results in a loss of earnings or not.
Q126. You have been invited to make a presentation to members of a local labour group about the risks they face in the event that they could not work for a significant period due to an accident or illness. They are all eligible for Employment Insurance (EI) and Workers' Compensation Benefits (WCB). They have a basic long term disability (LTD) plan with a 4 month waiting period and a maximum 24 month benefit. The maximum benefit amount is $2,200 per month, any occupation. Average income from employment for these employees is slightly more than $5,000 per month. Which of the risks below would be MOST applicable to these employees?
a. the risk of loss of income for the needs of the family
b. the risk of loss of purchasing power as a result of inflation
c. the risk of tax consequences
d. the risk of loss of independence
Q127. Roger and Peter are considering a group benefits and insurance plan for their business and employees. You are discussing the options with them and the responsibilities that will be undertaken by them as the plan sponsor versus the obligations that the insurance company will be responsible for. Which of the following statements is correct?
a. The plan sponsor is responsible for premium billing.
b. The insurance company is responsible for claims.
c. The insurance company is responsible for plan member enrolment.
d. The plan sponsor is responsible for the payment of benefits.
Q128. Chunhua is a licensed insurance agent working on a number of disability insurance policies for her clients. The First National Insurance Company notifies Chunhua that the premiums will be rated for one of her disability insurance applicants. Which of the applicants below will be the MOST likely to have their premiums rated?
a. Jordao, who is 52 and diagnosed with Type 2 diabetes and whose father and grandfather became disabled from the disease.
b. Isabela, who is in remission after surgery and radiation treatment last year for breast cancer.
c. Filipe, who is a 29 year old non-smoker in good health with no family history of disease.
d. Emilia, who is 29 and in good health and whose mother passed away from complications due to Type 2 diabetes.
Q129. Ted and Gayle, both 47, have been married for 20 years. Gayle has not worked outside of the home since their marriage while Ted is a cabinet-maker. Gayle helps Ted with the billings for his work and places the orders for the specialty woods and mechanical fittings used. Ted has a history of strain and injuries to his lower back and right arm. Gayle has arthritis in her knees and carpal tunnel syndrome in both wrists. Which of the following statements BEST describes Ted and Gayle's prospects concerning disability insurance coverage?
a. If Ted and Gayle are in the market for a new mortgage, they may be able to obtain Creditor Disability Insurance which may be offered with little, or no, medical underwriting at the time of application.
b. Ted will likely be eligible for Guaranteed Issue Disability Insurance (DI) given his occupation, while Gayle will not be eligible given her present work status.
c. If insured, Ted will likely pay higher premiums for disability insurance than Gayle would for the same coverage because historically the number and length of claims is higher for men than for women.
d. Ted and Gayle may be able to obtain Individual Disability Insurance without medical underwriting if they apply for basic coverage, but medical underwriting will apply to additional coverage over basic.
Q130. Connie is in the process of purchasing a house and is arranging for her mortgage financing. She would like to have some level of disability coverage and is not sure if she should purchase the mortgage disability insurance available from the bank or if she should instead purchase an individual disability policy. Which of the following statements concerning Connie's options is CORRECT?
a. Mortgage insurance has more stringent underwriting than individual insurance.
b. The beneficiary for mortgage insurance is different from an individual disability policy.
c. The benefits from mortgage insurance can be used for any purpose.
d. The definition of disability is the same for mortgage insurance and individual disability policies
Q131. Mario and Ivan are brothers who buy 2 townhouses adjacent to each other for the same purchase price from the developer. Both of them obtain their mortgages for the same amount from the same lender, Realty Credit Union. Both Mario and Ivan will live in their townhouses as their principal residence. Mario decides to purchase mortgage insurance and Ivan decides to purchase an individual disability policy. Which of the following statements about Mario and Ivan's policies is CORRECT?
a. Both Mario and Ivan's policy premiums will be treated as a non-deductible expense.
b. Both Mario and Ivan will designate themselves as beneficiaries on their respective policies.
c. Both Mario and Ivan will have the right to choose their occupation definitions.
d. Both Mario and Ivan can shop around to get the lowest premiums on their respective policies.
Q132. Simone, is a group insurance agent with Westcare Health. He is in the process of proposing a new group disability plan for Pedal to the Metal (PTM), a medium sized chain of bicycle repair shops. The plan will include critical illness (CI) coverage. Which of the following factors should Simone review and compare between the old plan and new plan?
i. maximum benefits
ii. covered conditions
iii. deductible
iv. amount of coverage
a. i and ii
b. i and iii
c. ii and iv
d. iii and iv
Q133. Mark (49) and Rosa (46) have approached you about long term care (LTC) insurance. They recently faced financial choices relating to ongoing care for Rosa's mother, now in her late 80s, and they are considering coverage for themselves to avoid the pitfalls that Rosa's mother has endured. They want an LTC policy which will be paid directly to the care provider(s). You inform them that the benefits will be subject to daily and overall limits specified in the contract. Which of the following statements is correct?
a. The benefits for their policy will be paid on a reimbursement basis.
b. The benefits for their policy will be paid on a taxable basis.
c. The benefits for their policy will be paid on an indemnity basis.
d. The benefits for their policy will be paid on a tax-deductible basis.
Q134. Ajeet has a renovation and drywall contracting business and the business is covered by a Disability Business Overhead Expense (BOE) insurance policy he purchased. Which of the following statements about Disability BOE insurance is correct?
a. If the benefit on the policy is $5,000 per month for 24 months, the benefit payment will be a fixed amount of $5,000 per month.
b. If the benefit on the policy is $5,000 per month for 24 months, the benefit payment will be a maximum reimbursement amount of $5,000 per month
c. If the benefit on the policy is $5,000 per month for 24 months, the benefit payment will be an income replacement amount of $5,000 per month.
d. If the benefit on the policy is $5,000 per month for 24 months, the fixed benefit payment will be paid until the insured returns to work.
Q135. Your client Claude is a senior executive and he has approached you about additional disability insurance coverage. In your analysis of Claude's insurance needs, you determine that he will need an "own occupation" policy given his executive status. Before you can determine or recommend a solution, you assess Claude's existing coverage from all sources. In your assessment of his existing coverage, which of the following would generally provide coverage on an "own occupation" basis?
a. Canada Pension Plan (CPP) coverage.
b. Employment Insurance (EI) coverage
c. Creditor Disability insurance coverage
d. short-term disability coverage under his group plan.
Q136. Hank is a welder who has gross income of $55,000 and takes home $40,000 after taxes. Hank also receives $15,000 annually from his former employer's pension plan. Hank has a disability insurance policy with a 60% maximum benefit. Hank injures his leg while on vacation and is unable to work for an extended period. What is the maximum allowable benefit Hank will receive under his disability policy?
a. $24,000
b. $27,000
c. $33,000
d. $42,000
Q137. Xian manages security at a local casino and has an annual salary of $72,000. Xian has a disability policy that will pay 60% of her income if she becomes totally disabled and unable to work. The policy also carries a standard residual disability clause. Xian sustains an injury and after 8 months of total disability, Xian's physician allows her to return to work 3 days a week, equivalent to 60%. How much would Xian receive in disability benefits a month under her disability policy?
a. $0
b. $1,440
c. $2,400
d. $5,040
Q138. Garnet is an insurance agent working with Zula to review her insurance needs. Garnet has previously helped Zula obtain life insurance and Zula now wants to obtain accident and sickness insurance. Zula would like to retire in 10 years and considers continuity of income her main objective. Which of the following types of individual insurance BEST meets Zula's objective?
a. disability insurance
b. critical illness insurance
c. accidental death and dismemberment insurance
d. long-term care insurance
Q139. Hardeep is a lawyer and partner at a large law firm in Toronto. He recently purchased an individual disability insurance policy. The policy has an occupational clause and uses the "own occupation" definition for disability. Which of the following statements about Hardeep's policy is CORRECT?
A. Hardeep's policy has lower premiums than an "any occupation" policy for the same coverage.
B. Hardeep's benefits will be reduced if he returns to work in another capacity.
C. It is easier to claim benefits under Hardeep's policy than under an "any occupation" policy.
D. Hardeep's benefits will be terminated if he returns to work in another occupation.
Q140. Hank works for a manufacturing firm and has a group policy that includes disability insurance. Hank was drinking and driving and drove his car into a tree. The resulting injuries are serious and will require Hank to take several months off work. Hank submits a claim for disability insurance to cover his income while he is unable to work. Which of the following will be the MOST likely outcome to Hank's disability claim?
a. the claim will not be paid due to the absence of loss
b. the insurer will reduce the monthly benefit amount
c. the insurer will increase the length of Hank's waiting period
d. the claim will not be paid due to an exclusion
Q141. Breno has a group extended health coverage plan with a $3,500 annual coverage limit, a $500 deductible, and a 70% co-insurance factor. Breno incurs $2,000 of eligible medical expenses in the current year. Which of the following CORRECTLY describes Breno's benefits under his group extended health care coverage?
a. Breno must pay 70% of the first $500 of medical expenses he incurs.
b. Breno must pay 30% of the first $500 of medical expenses he incurs.
c. Breno must pay $950 for his medical expenses in the current year.
d. Breno will be reimbursed for a total of $1,400 for the current year.
Q142. You have completed an application for critical illness (CI) insurance with your client. You review the data collected and you inform them about the Medical Information Bureau (MIB). Which of the following statements about the MIB is correct?
a. The information from the MIB will be used to by the insurance companies to determine whether the applicant is insurable or is declined.
b. The information from the MIB will be used by the insurance companies to protect themselves against applicants seeking to "over-insure" themselves.
c. An MIB-member company is automatically authorized to search and exchange medical information concerning its applicants.
d. The MIB collects additional medical information such as medical exams by paramedical technicians, blood and urine tests, and electrocardiograms.
Q143. Hassan and Sultan are married with a son, Kass age 4. Hassan has worked as a property manager with a local strata management company for 4 years. Sultan is a systems analyst in the IT Department of the municipal government. Sultan has a good group package with disability coverage that provides a level payment plan with no benefit indexing either pre-or post-disability. Hassan's employer's group plan does not offer disability coverage. Hassan has been diligently saving for retirement in his registered retirement savings plans (RRSP) and has been contributing the maximum amount each year. He has no unused RRSP contribution room. They have creditor disability coverage on their mortgage for both of them. Which of the following statements correctly describes what would happen if Hassan became disabled and could not work for 2 years as a result of his injuries?
a. Hassan would receive Employment Insurance (EI) equal to Workers Compensation (WCB), on a dollar-for-dollar basis, up to a maximum benefit of $514.
b. Hassan would receive Workers Compensation (WCB) benefits of 100% of contributions paid by the employer as a payroll tax.
c. Hassan would receive Canada Pension Plan (CPP) benefits of 100% of Hassan's pre-disability income.
d. Hassan would have to stop contributing to his RRSP after the first year of disability because he would not have earned income.
Q144. Sandra has just recently started working for GreenFields Inc., a small landscaping firm which operates solely in the city of Langley, British Columbia. As an employee of GreenFields, Sandra has joined the company group extended health insurance plan. The plan includes vision, dental, and prescription drug coverage. Which of the following statements CORRECTLY describes the tax implications of Sandra's group extended health insurance premiums and benefits?
a. Premiums paid by Greenfields would be considered a taxable benefit to Sandra.
b. Premiums paid by Greenfields are a tax deductible expense for Greenfields.
c. Premiums paid by Sandra are tax-deductible for Sandra.
d. Prescription drug benefits received by Sandra are taxable.
Q145. Bracklin, a lawyer age 55, would like an individual disability insurance policy. His main objective is to ensure that once he is issued the policy, he will always have the same coverage with the same terms until the policy matures at age 65. At age 65, he wants to have the option to convert the policy, without medical evidence, to mature at age 75. Which of the following policies BEST meet Bracklin's twin-objectives?
a. non-cancelable policy
b. cancelable policy
c. guaranteed-to-issue policy
d. guaranteed renewable policy
Q146. Rumela has a disability insurance (DI) policy that pays $4,500 per month in the event of disability. The policy has a presumptive disability clause, a 90-day waiting period, and 10-year benefit period. Subsequently, Rumela is injured and becomes totally and permanently deaf. However, this does not result in a loss of earnings since Rumela's deafness does not affect her ability to function normally in her job as a computer software programmer. Which of the following statements CORRECTLY describes the outcome in this situation?
a. Rumela would not qualify for benefits under her policy.
b. Rumela would receive $4,500 per month starting immediately.
c. Rumela would receive $4,500 per month starting after 90 days.
d. Rumela's benefits will be discontinued if she returns to work.
Q147. Nubia works at a small engineering firm, ENG Inc. Although Nubia is not a shareholder of the firm, she is considered a key employee who is vital to the success of the firm. To protect itself in the event of Nubia's disability, ENG Inc. purchases a disability insurance policy based on Nubia's life. Based on this information, which of the following statements CORRECTLY describes the tax treatment of the premiums and benefits?
i. If ENG Inc. pays the policy premiums and is the beneficiary, the premiums are a tax-deductible business expense for ENG Inc.
ii. If ENG Inc. pays the policy premiums and Nubia is the beneficiary, the premiums are a tax-deductible business expense for ENG Inc.
iii. If ENG Inc. pays the policy premiums and is the beneficiary, the benefits received by ENG Inc. will be taxable.
iv. If ENG Inc. pays the policy premiums and Nubia is the beneficiary, the premiums are a taxable benefit to Nubia.
a. i and iii
b. i and iv
c. ii and iv
d. ii and iii
Q148. Your client Lyndah has a group plan through her employer which provides life insurance, extended health, dental, and short-term and long-term disability (STD and LTD). Lyndah also wants to explore additional disability coverage through you. Lyndah applies for additional LTD coverage which would provide a benefit of $2,000 per month. Her existing employer LTD plan also provides an LTD benefit of 66 2/3% of base salary of $3,000 per month. The underwriting department declines Lyndah's application due to limits which might result in "anti-selection" and/or the potential for the insured to "malinger" claims. Which of the following BEST describes why Lyndah's application was denied in this scenario?
a. Lyndah would be under-insured with the addition of the new coverage.
b. Lyndah has shown to have a high lapse rate in her employer plan.
c. Lyndah would be over-insured with the addition of the new coverage.
d. Lyndah's ratings and exclusions are below the standard range.
Q149. Kaitlyn earns $60,000 annually and has a disability insurance (DI) policy with a residual disability clause. The policy pays $3,500 per month, has a 0-day waiting period, and a 5-year benefit period. Kaitlyn becomes injured and qualifies for disability payments under the terms of her policy. 12 months later, she returns to work on a part time basis, earning 25% of her pre-disability income. Kaitlyn continues working part-time for 24 months and then returns to work on a full time basis. How much will Kaitlyn receive in total part-time income and benefits for the whole period that she was disabled?
a. $105,000
b. $126,000
c. $135,000
d. $156,000
Q150. Your client, Bjork, is purchasing a house. Although Bjork can comfortably afford the $2,000 monthly mortgage payments, she is concerned that she would not be able to afford the payments if she were to become disabled. When contemplating her insurance options, Bjork considers whether she should opt for an individual disability insurance policy or a mortgage disability insurance policy. When Bjork asks you to explain the policies, which of the following statements would be a CORRECT explanation?
a. For both an individual disability insurance policy and a mortgage disability insurance policy, Bjork must be the policyholder.
b. The premiums are typically lower for an individual disability insurance policy than for a mortgage disability insurance policy.
c. For a mortgage disability insurance policy, the institution granting the mortgage must be the beneficiary.
d. For an individual disability insurance policy, Bjork must select an "any occupation" definition of disability.
Q151. Connie completes an application for disability insurance through HealthPlus Insurance Corporation. The new policy will replace an existing policy with a different insurer. Connie is in overall good health and with the help of her agent, Finny, she has completed the standard application form. In terms of further supporting documents or procedures for Connie's application, which of the following is CORRECT?
a. Finny will be required to complete the inspection report.
b. Connie will be required to conduct the financial and medical underwritings.
c. Finny will be required to complete a form comparing Connie's new and old policies.
d. Connie will be required to supply the inspection report.
Q152. Darren and Gabriella are a young working couple raising their 2 pre-school children. Darren is an entrepreneur and his auto-body franchise business is just starting to take off. He expects that his business will continue to excel and he projects that his income will continue to rise by 6% or more a year. Gabriella is a realtor who works out of her home office. Neither Darren nor Gabriella have employer plans or group coverage and they approach you about disability insurance. While Darren determines that he can currently afford a premium of $200 per month, he believes that he will be able to afford more as his business excels and his income rises. You discuss riders that can be added to the policy to tailor to their future insurance needs. Which of the following is the BEST option for Darren and Gabriella in this scenario?
a. cost of living adjustment
b. future purchase option
c. residual disability benefit
d. waiver of premium
Q153. Stephanie Hooper owns a medium sized food manufacturing firm called Hoop's Soups. The company provides its employees with a group insurance plan through Southsun Life Insurance Company. Southsun sets the premiums for the group plan based on what their anticipated cost of the claims are and bears the full financial responsibility for paying all claims. The insurance company will benefit if the cost of claims are less than what they receive in premiums. What type of funding formula does Hoop's Soups utilize?
a. refund accounting
b. administrative services only
c. non-refund accounting
d. non-contributory
Q154. Hank is a welder who has gross income of $55,000 and takes home $40,000 after taxes. Hank also receives $15,000 annually from his former employer's pension plan. Hank has a disability insurance policy with a 60% maximum benefit. Hank injures his leg while on vacation and is unable to work for an extended period. What is the maximum allowable benefit Hank will receive under his disability policy?
a. $24,000
b. $27,000
c. $33,000
d. $42,000
a. Henryk is likely to pay a higher premium because he is more probable of becoming totally disabled for a longer period than Aaron.
b. Aaron is likely to pay a higher premium because the duration of a disability claim generally decreases with age.
c. Aaron is likely to pay a lower premium because the likelihood of disability occurring decreases with age.
d. Henryk is likely to pay a lower premium because he is less probable of becoming totally disabled for a longer period than Aaron.
Q155. You are preparing for a meeting with Damon (37) and Patricia (33) who have been married for 8 years. Having no children, their concern is for themselves in the event that either is disabled for an extended period. Patricia in particular is concerned about financial support if either of them requires long term care. While they are covered by their employers' group plans, they do not have coverage for disability. Which of the following statements is correct?
a. The duration of a disability claim generally increases with age.
b. The risk of total disability for men is greater than for women.
c. The average duration of disability for men is longer than for women.
d. The average duration of is disability is shorter as age increases.
Q156. Elena has been a bookkeeper for a local farm equipment assembly business for 3 years and she has been a member of the group insurance plan during that time. The group plan offers short-term and long-term disability (STD and LTD). Elena wants to know when her benefit payments would start for STD should she become disabled as a result of illness. Which of the following statements about STD benefit payments is correct?
a. The STD waiting period will be 30 days before STD benefits will be paid.
b. STD will pay a first-day benefit if the plan is co-ordinated with employment insurance (EI).
c. STD payments will be made after LTD coverage expires.
d. The STD waiting period is longer when the disability is a result of an accident at work.
Q157. Marcello is a stockbroker who earns $120,000 annually. He owns a disability insurance (DI) policy with an "own occupation" definition of disability that would pay him $6,000 per month in the event of disability. The policy has a 0-day waiting period and a 10-year benefit period. Subsequently, due to the nature of his job, Marcello suffers from stress and anxiety and is declared disabled as per the terms of his policy. After 6 months of receiving disability benefits, Marcello accepts a teaching position at his local college where he earns $5,000 per month. Which of the following statements CORRECTLY describes what the outcome will be given Marcello's circumstances?
a. Marcello's benefits will be terminated when he begins teaching.
b. Marcello's benefits will be reduced to $1,000 per month when he begins teaching.
c. Marcello's benefits will be reduced to $5,000 per month when he begins teaching.
d. Marcello will continue to receive $6,000 in benefits per month while he is teaching.
Q158. Suzanne slips and falls when carrying some heavy files which results in fractures to her leg and arm. She undergoes surgery and has been advised that her recovery will take at least 6 months during which time she will need to be off work. After surgery, Suzanne works with a physiotherapist regularly. Suzanne verbally informs her group plan insurance agent, Jessie, about the disability and instructs her to commence the processing of her disability claim. Which of the following statements regarding Suzanne's disability claim is CORRECT?
a. Suzanne must notify the insurer directly for the claims process to begin.
b. Jessie must adjudicate the claim in order for the insurer to pay or deny it.
c. Jessie's confirmation of Suzanne's injury will satisfy the insurer's claim process.
d. Suzanne must send ongoing proof of diagnosis or treatment to the insurance company.
Q159. Thea works in a bakery and makes $40,000 annually. She has a disability insurance policy that pays a monthly benefit of $2,000 in the event of disability. The policy has a 60-day waiting period and 2-year benefit period. Thea is injured in a serious car accident and qualifies for benefits under her policy. After 24 months, she returns to work. What are the total amount of benefits received by Thea under her policy?
a. $40,000
b. $44,000
c. $48,000
d. $52,000
Q160. Sanderson is a bus driver who earns a monthly gross income of $3,500. His wife Norma is the manager of an automotive parts store and she earns gross income of $2,250 every two weeks. The couple has living expenses, including their mortgage and property tax, of $3,000 a month. They have other debt payments totalling $900 per month and they invest $900 a month to their registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). Their remaining monthly discretionary expenses total $1,200 per month. Sanderson has an average tax rate of 20% and Norma's is 25%. What is the couple's monthly cash flow?
a. -$1,512
b. $456
c. $1,356
d. $1,656
Q161. Sandra has just recently started working for GreenFields Inc., a small landscaping firm which operates solely in the city of Langley, British Columbia. As an employee of GreenFields, Sandra has joined the company group extended health insurance plan. The plan includes vision, dental, and prescription drug coverage. Which of the following statements CORRECTLY describes the tax implications of Sandra's group extended health insurance premiums and benefits?
a. Premiums paid by Greenfields would be considered a taxable benefit to Sandra.
b. Premiums paid by Greenfields are a tax deductible expense for Greenfields.
c. Premiums paid by Sandra are tax-deductible for Sandra.
d. Prescription drug benefits received by Sandra are taxable.
Q162. ARC Softech Inc. has 15 employees including William (owner) and Cindy (office staff). They have an existing group plan that offers basic Extended Medical and Dental coverage, without deductibles, co-insurance, or annual maximums. The plan does not cover Short-Term Disability since they are all covered by Employment Insurance (EI). The plan offers Long-Term Disability (LTD) coverage of 66 2/3% of base salary to a maximum of $2,000 per month. Everyone is covered by Worker's Compensation Benefits (WCB). Following your assessment of existing coverage, you determine that expanded coverage for ARC Softech Inc. is warranted in order to remove the maximum per month from the LTD benefit. Which of the following would be the BEST option to expand the existing coverage without increasing the total cost?
a. cancel the extended medical coverage and use the premium reductions to increase the maximum LTD benefit
b. add an annual deductible to the extended medical and dental coverage and use the premium reductions to increase the LTD maximum benefit
c. re-write the LTD to a non-occupational plan and use the premium savings to increase the maximum LTD benefit
d. cancel the dental coverage and use the premium reductions to increase the maximum LTD benefit
Q163. Ian applies for an individual disability insurance (DI) policy with a return of premium (ROP) rider. During the application process, the insurer determines that Ian is overweight. After the underwriting process, the insurer issues a policy with a rating due to Ian's weight issue. Which of the following provides a CORRECT description what will happen under Ian's disability insurance policy?
a. Any amounts received by Ian as a return of premium will be tax-free.
b. If Ian suffers a disability related to his weight, no benefits will be payable.
c. Ian will receive a return of premium if the total claims exceed the premiums paid.
d. The premiums that Ian pays will be tax-deductible.
Q164. Philomena previously worked for a large bank for a number of years, where she was a member of the group benefits plan. Recently, Philomena resigned from the bank in order to start her own consulting practice. Her husband, Greg, recently retired. As an independent consultant, one of Philomena's biggest concerns is properly insuring herself. In particular, she is concerned about protecting her income in the event of a disability. When Philomena asks you about disability insurance (DI) protection, which of the following statements is CORRECT?
a. Generally speaking, the premiums Philomena pays for her individual DI policy will be tax deductible.
b. Generally speaking, any benefits Philomena receives from her individual DI policy will be taxable.
c. For her individual DI policy, Philomena will typically be the payor and Greg will be the beneficiary.
d. For her individual DI policy, Philomena will typically be the payor, the life insured, and the beneficiary.
Q165. Your client Joe Barnes is a police officer in the Royal Newfoundland Constabulary (RNC) based in Corner Brook, Newfoundland. Joe's group plan with the RNC is good and includes prescription drug coverage. The insurance company for the RNC plan maintains a formulary for the prescription drug coverage. Assuming that the formulary for the RNC plan follows typical conventions for prescription drug coverage, which of the following statements is correct?
a. If Joe insists on receiving a brand-name drug rather than the generic drug, he will only be covered for the cost of the generic drug and he will have to pay the difference himself.
b. If Joe insists on receiving a brand-name drug rather than the generic drug, he will be covered for the full cost of the brand-name drug.
c. If Joe insists on receiving a brand-name drug rather than the generic drug, he will not be covered and he will have to bear the full cost of the brand-name drug.
d. If Joe insists on receiving a brand-name drug rather than the generic drug, he will only be covered for 50% of the cost and he will have to pay the remaining 50% himself.
Q166. Keegan has a disability insurance (DI) policy with a 0-day waiting period and a 2-year benefit period. The policy will pay $4,000 per month and has a cost of living adjustment (COLA) rider, calculated by the simple method: the benefit is indexed by 3.5% per year based on the initial benefit payable. Keegan becomes disabled as per the terms of his policy and is off work for 36 months. What would be the total amount of benefits received by Keegan?
a. $96,000
b. $97,680
c. $147,360
d. $149,040
Q167. Serena is a member of her employer's group disability insurance plan. Serena and her employer share the cost of the premium 50%/50% and the total premium paid on the plan to date has been $7,400. Serena made her first claim since joining that plan and received $21,000 in benefits this past year. How much of the disability income would be taxable to Serena?
a. $0
b. $3,700
c. $17,300
d. $21,000
Q168. Pat is a surgical nurse at Toronto General Hospital. She has benefits under the Ontario Nurse's Association which provide her with Short-Term Disability (STD) benefits of 75% of income and Long-Term Disability (LTD) benefits of 60% of income. Under the STD coverage and the first 12 months of LTD coverage, Pat qualifies as being "disabled" if she cannot perform all of the primary duties of her regular occupation, even part of the time. Which type of coverage does Pat have?
a. any occupation
b. regular occupation
c. own occupation
d. total disability
Q169. Jensen is the sole owner and operator of a small embroidering firm called "Stitch This" which designs and creates promotional goods for other businesses and sports teams. "Stitch This" has three employees who work under Jensen's direction. Jensen is concerned that if he were to become disabled and unable to work for a period of time, not only would he lose his income, but his business may not be able to survive considering the ongoing operating expenses. Which of the following insurance policies would BEST address the needs of "Stitch This"?
a. disability business overhead expense insurance
b. key person disability insurance
c. business loan protection disability insurance
d. disability buyout insurance
Need only correct answers; I do not need explanation only answers.