Q:Ben is unhappy with the advice and service provided to him by Larry, his insurance agent. He has discussed his concerns with Larry, but has been unable to resolve the situation. Which organizations should Ben contact next?

The insurer, followed by the Insurance Ombudsman, followed by Ben's lawyer

Advocis, followed by the Canadian Life and Health Insurance Association, followed by the Office of the Superintendent of Financial Institutions

The insurer, followed by Ben's lawyer

The insurer, followed by Assuris, followed by the Office of the Superintendent of Financial Institutions

Oops, You are wrong :(Your answer was :The insurer, followed by Ben's lawyerThe correct answer is :The insurer, followed by the Insurance Ombudsman, followed by Ben's lawyerRationale:The correct answer is: "The insurer, followed by the Insurance Ombudsman, followed by Ben's lawyer"

The Insurance Ombudsman offers consumers an informal, cost-effective, last-step forum for resolving disputes arising from all forums of insurance contracts before filing a court case, The fist step is lodging their complaint with the insurance company.Q:Nicholas has a whole life insurance policy with a face amount of $400,000 and $70,000 in the policy reserve. If his insurance company becomes insolvent, how much of Nicholas' coverage will be guaranteed by Assuris?$260,000 of death benefit, $70,000 of cash value$340,000 of death benefit, $60,000 0f cash value$359,500 of death benefit, $60,000 of cash value$400,000 of death benefit, $70,000 of cash valueYou are correct!!!The answer is$340,000 of death benefit, $60,000 0f cash valueRationale:The correct answer is: "$340,000 of death benefit, $60,000 of cash value"

Assuris Guarantees: Assuris will be cover 100% of death benefit for up to $200,000 and for death benefits greater than $200,000 it covers $200,000 or 85% of the promised death benefit (whichever is greater), in this case it is $340,000 ($400,000 x 85%).

For Cash Values Assuris will cover 100% of cash values up to $60,000 and for cash values greater than $60,000 Assuris covers $60,000 or 85% of the investment account (whichever is greater), in this case 85% of $70,000 is $59,500. Therefore $60,000 is greater.Q:Which of the following statements regarding personal information collected about a client is true?Personal information should never be disclosed without the client's consent.Personal information should not be disclosed to third parties under any circumstances.Personal information should be disclosed if required by law.The sharing of personal information is governed by ethical standards but not by legislation.ou are correct!!!The answer isPersonal information should be disclosed if required by law.Rationale:The correct answer is: "Personal information should be disclosed if required by law."

The national guidelines of the Canadian Life and Health Insurance Association (CLHIA) state that personal information should be provided to others only:

If the individual gives his or her consent If disclosure is required by law If the information is reasonably necessary to determine eligibility To protect the insurer against fraud or misrepresentation If the information is disclosed in the discharge of a public dutyQ:Walter is working with his new client, Julie, to complete a life insurance application. Which of the details below is he not required to disclose to Julie?

A financial summary of the policy on Julie's request.

The amount of commission he will receive for placing the policy.

Information on how to cancel the policy.

The names of all insurers he represents.

You are correct!!!The answer isThe amount of commission he will receive for placing the policy.Rationale:The correct answer is: "The amount of commission he will receive for placing the policy."

An agent need not disclose the amount of commission he will receive. B, C, and D are correct.Q:Richard Rymer was licensed as a life insurance agent last year. In the early days of his training, his sales manager accompanied him on some planning and sales appointments, and he was later paired with a more senior agent, to help him to "learn the ropes." Now, Richard is operating by himself.

Richard recently interviewed neighbours of his parents (at his parents' suggestion), Marge and Pierre Allard, with regard to their insurance and investments. After an initial get-acquainted interview, Richard estimated that the Allards needed another $180,000 of permanent life insurance and suggested universal life insurance (because it was the Acme Life Insurance Company's best commission-paying product). He described universal life as essentially "buying term and investing the difference," and didn't go into any more detail. He also recommended that the couple invest their maturing GICs into an equity-based segregated fund the investment product that he sells to all of his clients, regardless of their past investment experience. He didn't explain that the couple would be investing for a 10-year period in a product that carries more risk.

In the course of completing the life insurance application, Mr. Allard said that he smoked one or two cigars a year at poker. Richard suggested that Mr Allard could be classified as a non-smoker and ticked "no" next to the question about the use of tobacco products.

At dinner at his parents' house a few days later Richard mentioned that he had followed up on their referral to the Allards and that he had met with them a couple of times. He also mentioned that he was impressed with the Allards' financial awareness, and his parents were surprised to learn from Richard the considerable amount the Allards had managed to save.

Which of his responsibilities to the Allards has Richard most compromised by his behaviour?

Richard must refrain from using undue influence; not engage in tied selling; and maintain confidentiality.

Richard must maintain the confidentiality of the Allards; avoid all conflicts of interest; and apply the "Know Your Client" principle to their needs.

Richard must avoid all conflicts of interest; pass all relevant information about the Allards to the life insurance company; and refrain from "holding out."

Richard must maintain the confidentiality of the Allards; not engage in tied selling; and refrain from "holding out."

You are correct!!!The answer isRichard must maintain the confidentiality of the Allards; avoid all conflicts of interest; and apply the "Know Your Client" principle to their needs.Rationale:Rationale for Correct Answer:Richard is required to maintain the confidentiality of information revealed to him by clients (and not to reveal details to others, like his parents); he must avoid conflicts of interest, such as selling a product to his clients just because it offers him the best commission (like the universal life plan); and he must make recommendations that are suitable to this specific client, based upon knowledge of the clients' needs and risk tolerances, etc. He should not simply sell products (like the equity segregated fund) on a "one size fits all" basis.

Reasons the other answers are incorrect:Holding out refers to how an agent presents himself or herself to the general public. Richard is not guilty of presenting himself as anything other than an insurance agent.

He is not guilty of tied selling, as no one was forced to buy another product in order to buy.

Richard has not unduly influenced the Allards, nor engaged in tied selling.Q:Kirsten has reviewed the life insurance coverage currently held by her new client, Manuel, age 45. Manuel has had his existing coverage in place for 15 years. Kirsten feels that it would be in Manuel's best interests to replace his coverage with a new policy. What information must Kirsten provide to Manuel?

Option 1: A standard disclosure statement comparing all the features of the existing policy with those of the proposed replacement policyOption 2: Suicide and incontestable contract provisions begin anew.Option 3: Suicide and incontestable contract provisions continue on from the original policy.Option 4: New first year charges apply to the new policy.Option 5: Premiums will be higher due to Manuel's attained age.

Options 1, 3, 4 and 5

Options 1, 2 and 4

Options 1, 2, 4 and 5

Options 1, 3and 4

You are correct!!!The answer isOptions 1, 2, 4 and 5Rationale:The correct answer is: "Options 1, 2, 4 and 5"

Replacement is perfectly valid as long as the replacement is in the client's best interests and the new policy has not been misrepresented or an incomplete comparison has not been made between policies. The client must be provided with a standard disclosure statement that compares all features of the existing policy with those of the proposed replacement policy. The disclosure statement, when signed by the client, must be sent to the insurer of the existing policy within three business days.

Q:An agency relationship exists between which of the following parties to an insurance contract?

The agent, the insurance company, and the client

The agent and the insurance company

The agent and the client

The client and the insurance company

You are correct!!!The answer isThe agent and the insurance companyRationale:The correct answer is: "The agent and the insurance company"

The agency contract is the contract between the agent and the insurer or insurers whose policies the agent will sell.Q:Richard Rymer was licensed as a life insurance agent last year. In the early days of his training, his sales manager accompanied him on some planning and sales appointments and he was later paired with a more senior agent, to help him to "learn the ropes." Now, Richard is operating by himself in a brokerage with sixteen other agents.

Richard recently interviewed neighbours of his parents (at his parents' suggestion), Marge and Pierre Allard, with regard to their insurance and investments. After an initial get-acquainted interview Richard estimated that the Allards needed another $180,000 of permanent life insurance and suggested that they acquire universal life insurance with Acme Life Insurance Company (because it was the best commission-paying product offered by the broker). He described universal life as essentially "buying term and investing the difference," and didn't go into any more detail about competitive UL policies. He also recommended that the couple invest their maturing GICs into an equity-based segregated fund the investment product that he sells to all of his clients, regardless of their past investment experience. He didn't explain that the couple would be investing for a 10-year period in a product that carries more risk.

In the course of completing the life insurance application for the UL insurance, Mr. Allard said that he smoked one or two cigars a year at poker. Richard suggested that Mr Allard could be classified as a non-smoker and ticked "no" next to the question about the use of tobacco products.

At dinner at his parents' house a few days later, Richard mentioned that he had followed up on their referral to the Allards and that he had met with them a couple of times. He also mentioned that he was impressed with the Allards' financial awareness, and his parents were surprised to learn from Richard the considerable amount the Allards had managed to save.

Which of the following statements best sums up Richard's responsibilities to Acme Life Insurance Company?

Richard must sell the insurer's products exclusively; not misrepresent the company's products to applicants or clients; and realize that information about clients in his possession should also be in the possession of the insurance company.

Richard must complete the application accurately and realize that information about clients in his possession is deemed to be in the possession of the insurance company.

Richard must refrain from tied selling; complete the application accurately; and present all of the insurer's suitable products to clients as an option.

Richard must convey all relevant information from the applicant to the insurer; keep client information confidential; and avoid conflicts of interest.

You are correct!!!The answer isRichard must complete the application accurately and realize that information about clients in his possession is deemed to be in the possession of the insurance company.Rationale:Rationale for Correct Answer:The agent is the principal source of interaction with the client. He or she is obliged to complete the application accurately, and any information in the possession of the agent (such as the fact that Mr. Allard smokes the occasional cigar) should be conveyed to the insurer for legal purposes (constructive notice).

Reasons the other answers are incorrect:Only the accurate completion of the application relates to Richard's responsibilities to AcmeQ:Jesse has a 10-year renewable and convertible life insurance policy which was issued 10 years ago. At that time, Jesse was a non-smoker, but he took up smoking several years ago. A premium billing notice was sent to Jesse, but he was backpacking in India at that time, and the premium was unpaid. On Jesse's return six months later, he discovers that his policy lapsed during his absence. He contacts his agent, Ramona, and informs her that he would like to reinstate the policy. Ramona's fiduciary responsibility as an agent is to inform Jesse that which of the following limitations and provisions would be impacted?

Suicide and incontestability, entire contract, smoking status

Grace period, smoking status, entire contract

Suicide and incontestability, grace period

10 day right of rescission, smoking status

You are correct!!!The answer isSuicide and incontestability, entire contract, smoking statusRationale:The correct answer is: "Suicide and incontestability, entire contract, smoking status"

A life insurance agent has a duty to advise fully, honestly, with care, skill, and in good faith. To reinstate a policy, within two years of a lapse, the owner must pay all overdue premiums and provide evidence of insurability to the satisfaction of the insurance company. If and when the contract is reinstated, both the two-year contestability and the two-year suicide exclusion periods begin anew. Smoking status may also be affected, if a non smoker became a smoker before reinstating the policy.Q:Ten years ago, Kelly purchased a universal life insurance policy from her agent, Clinton. The policy was issued by First Choice Insurance Company. Kelly believes that Clinton misrepresented the benefits of this policy, and her lawyer recently advised her to file a lawsuit against both Clinton and First Choice Insurance Company. Although the lawsuit was successful, Kelly did not receive reimbursement from either Clinton or First Choice. Which organizations would have reimbursed Kelly?

The Canadian Life and Health Insurance Association would cover both claims.

Assuris would cover both claims.

Clinton's errors and omissions insurer would cover the claim against him. First Choice's errors and omissions insurer would cover the claim against the insurer.

Assuris would cover the claim against Clinton. The Canadian Life and Health Insurance Association would cover the claim against the insurer.

You are correct!!!The answer isClinton's errors and omissions insurer would cover the claim against him. First Choice's errors and omissions insurer would cover the claim against the insurer.Rationale:The correct answer is: "Clinton's errors and omissions insurer would cover the claim against him. First Choice's errors and omissions insurer would cover the claim against the insurer."

Insurance agents and carriers are vulnerable to lawsuits from clients claiming mistakes have been made. This type of professional liability is covered by errors-and-omissions (E&O) insurance. It is mandatory for all life agents. E&O insurance ensures that an agent or insurer will be protected against settlementsQ:David Barnes is a new life agent in the Bestever Insurance agency office in Kamloops. He started to work at the office just two weeks ago and, during this period, has sent 64 letters to all the members of the Chamber of Commerce, introducing himself, Bestever, and their products. He obtained the list of the members of the chamber from an agent in his office, who feels that no good prospects remain for him on that list, so makes the list available to David for $128.

David signs up three new policies from the list. He first convinces Mr. Bigg, a policyholder with cash value in his whole life policy with Big & Mighty Insurer, to take the cash value from the policy and redirect the funds towards David's favourite insurance product, segregated funds, with Bestever, because Bestever pays David a higher commission on the seg-funds contract than Big & Mighty would for the same transaction. David shows Mr Bigg that he will see a 14% rate of return on his investment, based on the performance of the last six months, and thereby yielding a much higher cash value than if the funds had stayed in the whole life policy. The second sale results when David tells the policy owner of another whole life policy about the wise decision made by Mr Bigg. The policy owner is impressed by the fact that, if Mr Bigg made the move to a seg fund, so should he. The final policy sale is made when David helps out Joe Sealy, who is 63, by paying the last three premiums of his 10-year renewable and convertible (R&C) term policy in order that Joe can convert the policy.

David is represented as helping the three customers by providing them with policies better suited to their needs. Has David shown any evidence of misconduct by helping these customers?

Yes. David has breached the confidentiality of a client, misrepresented the seg funds, and has used replacement and premium rebating.

No. David has served his customers' needs by providing them with policies that are better suited to their needs.

No. David is not guilty of any misconduct, because his actions all fall within the limits of actual authority.

Yes. David has employed the tactics of tied selling, twisting, churning, conversion, and misrepresentation.

You are correct!!!The answer isYes. David has breached the confidentiality of a client, misrepresented the seg funds, and has used replacement and premium rebating.Rationale:Rationale for Correct Answer:David may or may not have helped his clients and so that fact is irrelevant. His actions show many transgressions of proper agent conduct. Firstly, though, what activities has David engaged in thatarepermitted? He has paid a flat fee for the list of names; this is not commission-splitting and is okay. He replaces a term policy; this is not inappropriate, because Joe is obviously not a good prospect for term insurance renewal, and whole life is a good choice and available to Joe through his conversion option. However, conversion of the policy (in answer A) is permissible by the policy owner. It is not David who converts the policy; it is Joe.What activities has David engaged in of which there isevidence of misconduct? He replaces two in-force policies with inappropriate policies from a new insurer. Seg funds are inappropriate, because it is not appropriate to replace life insurance with an investment policy. David has employed twisting, not churning, because the policies have been switched from one insurer to another. Twisting and churning are both forms of replacement. Replacement is allowed, but only under very specific conditions. David helps out Joe with premiums, and is therefore guilty of premium rebating. David misrepresents the returns on the seg funds by using past performance as an indication of future returns. Finally, David should never have revealed Mr. Bigg's decision to anyone else. This is a clear breach of confidentiality.