Investments and Retirement

Question 1

Maturity Gurantee

Answer 1

the amount that the insurer would have to “top up” if the value of the IVIC is less than the guranteed amount

Question 2

Linear method of Reducing guarantee

Answer 2

=amount withdrawn / original amount invested

Gurantee would then be reduced by that %

Question 3

Proportionate method of Reducing gurantee

Answer 3

=amount of withdrawal / current value of investment

Question 4

Simplified Prospectus

Answer 4

must be mailed within 2 business days of the purchase of mutual funds

Question 5

Information Folder

Answer 5

the main disclosure document for segregated funds, must be given to the client before the sale

Question 6

MER

Answer 6

Segregated funds have higher MER due to the guarantees, an actively managed fund would have higher MER than an index fund

Question 7

The right to withdrawal

Answer 7

You have 2 business days to read through the prospectus and change your mind for mutual funds, there is no right of withdrawal or free look period for segregated funds

Question 8

NAVPS

Answer 8

=Total Assets - Total Liabilities / # of units outstanding

Question 9

Offering Price

Answer 9

NAVPS / (100 - front end load )

Question 10

Assuris

Answer 10

Protection for Insurance Products

Question 11

CIPF

Answer 11

Protection fund for investment firms

Question 12

CDIC

Answer 12

Protection fund for deposit taking institutions

Question 13

Exempt Policy

Answer 13

Any interest earned within the investment component of the policy is not subject to annual taxation

Question 14

Non Exempt Policy

Answer 14

Any interest earned within the investment component of the policy is subject to annual taxation

Question 15

Pre-1982 Policy

Answer 15

would have a higher ACB and in turn a lower policy gain if surrenderd ( subject to less tax upon redemption )

Question 16

Capital Gains Tax

Answer 16

Only have of capital gains are subject to tax

Question 17

Tax Benefits if employer is paying premium for group benefit plan

Answer 17

The monthly Premium is NOT a taxable benefit for the employee
The disability income WOULD be taxable upon disability

Question 18

Tax Benefits if the employee is paying premiums for a group benefit plan

Answer 18

The monthly premium is a taxable benefit for the employee

The disability income would not be taxable upon disability

Question 19

Withdrawals from RRSPS

Answer 19

Fully Taxed

Question 20

Prescribed Annuity

Answer 20

Interest portion of the payments are taxed but the taxation is spread evenly over the life of the annuity

Question 21

Non-Prescribed Annuity

Answer 21

Each annual payment includes some interest and some principal. While the payment itself is a fixed amount, more of the payment represents interest in the early years. Attracts more taxation in the early years than in the later years

Question 22

Transferring of RRSP or RRIF upon death

Answer 22

Spouse and Child over 18 - > tax deffered
Child under 18 - > used to buy an annuity, payments would be taxed in the childs hands each year until the age of 18 when all the money would have been paid out

Question 23

Straight Life Annuity

Answer 23

Will pay out for life

Question 24

Life Annuity - Installment Refund

Answer 24

Will pay out for life, but then potentially continue to pay an annual amount to the beneficiary

Question 25

Life Annuity - Lump Sum Refund

Answer 25

Will pay out for the life, but then potentially pay a lump sum to the beneficiary. If the annuitant dies before they recieved their initial premium back, the difference is paid as a lump sum to the beneficary

Question 26

Life Annuity - 10 year guaranteed term

Answer 26

Will pay out for life or for 10 years, whichever is longer

Question 27

10 year term certain annuity

Answer 27

Will pay out exactly for 10 years

Question 28

How can Pension Plans be Transfered

Answer 28

transfered to a locked-in-RRSP (also known as a LIRA or Locked-in-Retirement account)

Question 29

DPSP (Deferred Profit Sharing Plan) Contributions

Answer 29

Made by the employer only

The amount contributed is reflected in the employees P.A. and reduces what the employee can contribute to an RRSP

Question 30

Defined Contribution Plan

Answer 30

Add up the contributions from both the employee and the employer

Question 31

Defined Benefit Plan

Answer 31

(9x benefit entitlement) - 600

Question 32

OAS (old age security)

Answer 32

Only based on residency, can be recieved at age 65

Question 33

What does the CPP provide

Answer 33

Pension benefits, disability benefits and even death benefits ( currently 2500 )

Question 34

Vesting Period

Answer 34

Minimum amount of time that a plan holder must be part of the plan in order to be entitled to the funds contributed into the DPSP on the employees behalf

Question 35

Churning

Answer 35

Unlawful replacement of a policy with one from the same insurer

Question 36

Twisting

Answer 36

Unlawful replacement of a policy with one from another insurer

Question 37

FINTRAC

Answer 37

collects and analyzes information collected from financial institutions to help law enforcement investigate and prosecute money laundering offences

Question 38

BDS

Answer 38

required if the agent is recommending that the client cancel a policy or do something that will substantially take away from an existing policy for the purpose of buying another

Question 39

Fronting

Answer 39

an agent must not submit an application for insurance if another agent has actually completed the application but has not signed it