- (Topic 2)
Mike and Todd are both agents with Superior Insurance Company. Every Friday, they have lunch together at the local pub. One Friday, Mike forgets his wallet, so Todd pays both bills. Mike has a sales appointment that afternoon, where he will be signing a small term life insurance policy on a child. He decides to simply indicate that Todd is the agent of record so that Todd gets the compensation for the sale—an easy way to pay him back for lunch! What practice is Mike engaging in?
Correct Answer:B
Comprehensive and Detailed in Depth Explanation with Exact Extract from Documents and Guides:
TheIFSE Ethics and Professional Practice Course (Common Law)describes "fronting" as an unethical practice where an agent allows another agent to be listed as the agent of record for a sale they did not perform, often to share commissions improperly. Mike listing Todd as the agent of record for a sale he completed himself is fronting, done here to repay a personal favor. Tied selling (A) involves conditional sales, churning (C) is policy replacement for commissions, and misrepresentation (D) involves false statements to clients, none of which apply. Fronting undermines fair compensation practices, making B correct.
References:
IFSE Ethics and Professional Practice Course (Common Law), Module 1: Ethics and Professionalism, Section on "Unethical Practices – Fronting."
- (Topic 2)
Abishola purchases segregated funds from her insurance agent Bob. Before finalizing the transaction, she tells Bob that she will need the funds in a few months to make a down payment on a condo. Later, when Abishola calls to withdraw her funds, Bob informs her that she will incur a fee for withdrawing her funds prematurely. Abishola complains to Bob, and then to Bob's supervisor, without receiving a satisfactory response. To which organization can Abishola escalate her complaint?
Correct Answer:D
The OmbudService for Life and Health Insurance (OLHI) provides a platform for consumers to resolve disputes related to life and health insurance products in Canada. If Abishola is
dissatisfied with the responses from her insurance agent and his supervisor, she can escalate her complaint to the OLHI, which offers a neutral and independent review of disputes concerning insurance products like segregated funds.
Other organizations mentioned, such as Assuris, focus on protecting policyholders in cases of insurer insolvency, not individual complaints.
- (Topic 2)
Mordecai's life insurance lapsed four years after the policy was issued because he failed to make premium payments. The insurer reinstated the policy several months later when he made the required payments and provided the medical and financial information the insurer required. Twelve months later, Mordecai commits suicide and his beneficiaries ask Larry, his insurance agent, whether the claim will be paid. What should Larry tell the beneficiaries?
Correct Answer:C
Comprehensive and Detailed in Depth Explanation with Exact Extract from Documents and Guides:
TheIFSE Ethics and Professional Practice Course (Common Law)explains that life insurance policies typically include a suicide clause, which denies the death benefit if the insured commits suicide within a specified period—usually two years—from the policy??s issue date or reinstatement date. When a policy lapses and is reinstated, the suicide exclusion period restarts from the reinstatement date, not the original issue date. In this case, Mordecai??s policy lapsed after four years, was reinstated, and he committed suicide 12 months (less than two years) later. The incontestability clause (which prevents insurers from denying claims based on misstatements after two years) does not override the suicide exclusion, making A incorrect. Public order (B) is irrelevant, and there??s no evidence of a preexisting condition (D) affecting the suicide clause. Thus, Larry should inform the beneficiaries that the claim will be rejected due to the suicide exclusion restarting upon reinstatement, making C correct.
References:
IFSE Ethics and Professional Practice Course (Common Law), Module 2: Insurance Contracts, Section on "Suicide Clause" and "Reinstatement."
- (Topic 2)
When Tim and Patricia were common-law spouses, they met with an insurance agent, Aelia, to purchase life insurance policies of $100,000 each, naming each other as beneficiaries of their policies. Five years later, Patricia leaves Tim to be with her personal trainer, Thomas. A year later, Patricia and Thomas marry, and Patricia gives birth to their baby, Cedrick. Tragically, just before Cedrick's 12th birthday, Patricia dies in a fiery car crash. She never modified her beneficiary designation.
Shortly after the crash, Thomas calls Aelia to inform her that Patricia has died and that he wants to claim the death benefit on her life insurance policy.
Who will receive the $100,000 death benefit?
Correct Answer:A
Since Patricia did not modify the beneficiary designation on her life insurance policy after separating from Tim, he remains the named beneficiary. Under LLQP guidelines, the original beneficiary designation stands unless explicitly changed by the policyholder. This means that,despite Patricia??s remarriage and the birth of her child Cedrick, Tim remains the beneficiary and will receive the $100,000 death benefit.
Beneficiary designations on life insurance policies are not automatically altered by life events such as marriage or the birth of a child. Therefore, in the absence of any updates, Tim remains the beneficiary as per Patricia's original designation.
- (Topic 5)
(Clara is saving for a house and will likely need her money within a year. She seeks a segregated fund with minimal penalties for quick access.
Which sales charge should Irving recommend?)
Correct Answer:A
Ano-loadsegregated fund hasno sales charge on entry or exit, making it ideal for short- term investment needs. Clara would retain full liquidity without penalties.
Exact Extract:
"No-load segregated funds allow investors to redeem their units without incurring a sales charge, making them ideal for investors who may require liquidity within a short timeframe." (Reference:Segfunds-E313-2020-12-7ED, Chapter 2.3.2.3 No Sales Charge)