SEGREGATED FUND CONTRACT (Chapter 6) Flashcards
CHAPTER 6 - Segregated Fund Contract
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Only a ___________ can work with the investor to prepare and submit the application for a
segregated fund.
licensed life agent
TRUE OR FALSE?
The IVIC spells out the conditions for buying, terminating, withdrawing and receiving the benefits from the segregated fund investment
TRUE
- It is a document of disclosure intended to both reveal what the investor is buying and reinforce the risk associated with the investment.
A segregated Fund Contract makes contractual commitments to the investor. Name a few.
- Guarantees and benefits;
- Method to determine the value of benefits related to the market value of the fund and their surrender value;
- Percentage of premium allocated to provide the benefits related to the market value of the fund;
- When the value of the fund and benefits are determined;
- Fees and charges, or how fees and charges are calculated;
- Right to make changes to the contract
Individual variable insurance contract (IVIC) states and includes information that forms the contract. Name at least three
The contract states what information forms part of the contract. It includes:
- Identification of the IVIC and the segregated fund;
- Management expense ratio (MER);
- Risk disclosure;
- Fees and expenses;
- Right to cancel;
- Statement of the accuracy of the Fund Facts information and the remedy for any error in the information provided by that document
TRUE OR FALSE?
The application form of a seg-fund contract is completed only by the agent and insurance company.
FALSE
The application form of a seg-fund contract is completed by the investor and the agent together
[Ref. 6.2.1]
What is a “reason-why letter” ?
- The letter is prepared by the agent and provided to the client.
- It proves that the agent has addressed a relevant insurance need or needs by making recommendations to a client, together with the basis for the recommendations, and whether or not the client has accepted or refused those recommendations.
TRUE OR FALSE?
The reason-why letter is optional.
FALSE
The reason-why letter is not optional. The agent reviews it with the client, and both must keep a copy.
[Ref. 6.2.1]
TRUE OR FALSE?
A registered contract requires the owner to be the same person as the annuitant.
TRUE
TRUE OR FALSE?
In a registered seg-fund contract, ownership of the contract cannot be transferred but contract can be used as collateral.
FALSE
Ownership of the contract cannot be transferred and the contract cannot be used as collateral.
[Ref. 6.2.1.1]
TRUE OR FALSE?
When a spousal RRSP is set up, the owner and annuitant of the contract is the person who benefits from the deposits to the contract.
TRUE
Example;
Jill sets up a spousal RRSP in the name of her husband, Jack, and makes contributions to it. Jack is the owner and annuitant of the plan and he alone can name its beneficiary
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When an account is opened, reviewed, or a suspicious fact is detected, the agent has to confirm whether the client is a ________ , a ___________, a____________ or a family member or close associate of one of these people.
When an account is opened, reviewed, or a suspicious fact is detected, the agent has to confirm whether the client is a politically exposed foreign person (PEFP), a domestic politically exposed person (PEP), head of an international organization (HIO) or a family member or close associate
of one of these people.
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In general, a ________ is a person who has held a government or judicial position in a foreign country.
In general, a politically exposed foreign person (PEFP) is a person who has held a government or judicial position in a foreign country.
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A domestic __________ is a person who holds (or has held within the last five years) a specific office or position in or on behalf of the Canadian federal government, a Canadian provincial government, or a Canadian municipal government.
A domestic politically exposed person (PEP) is a person who holds (or has held within the last five years) a specific office or position in or on behalf of the Canadian federal government, a Canadian provincial government, or a Canadian municipal government.
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A _________________ is the head or
chief executive officer of an international organization set up by the governments of more than one country.
A head of an international organization (HIO) is the head or chief executive officer of an international organization set up by the governments of more than
one country.
FINTRAC has three methods to establish suitable client identification, what are they?
- Photo identification (applies to individuals who are physically present):
- A credit file
- Dual process
