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					Table of Contents
Index.................................................................................................................. iii

How to Study the LLQP, Welcome .................................................................. 1

1 Life Insurance
An Overview of the Canadian Life Insurance Industry ........................................ 5
“How are you qualified to sell insurance?” ........................................................ 15
“Why do I need insurance?” ............................................................................. 31
“What type of insurance should I have?” .......................................................... 39
“Do I need business insurance?” ...................................................................... 85
“What about group insurance?” ........................................................................ 97
“What about government insurance?”............................................................. 105
“How much insurance should I have?”............................................................ 113
“Which insurance company is best for me?” ................................................... 131
“How do I apply?” ........................................................................................... 137
“How do I get my money?” ............................................................................. 185


2 Investments
An Overview of Canadian Investments ........................................................... 213
“Why should I invest?” .................................................................................... 215
“Why should I buy investments from a life agent?” ......................................... 225
“How much should I invest?” .......................................................................... 233
“What are the different types of investments?” ............................................... 243
“What are the risks?” ..................................................................................... 301


3 Retirement
An Overview of Retirement in Canada............................................................ 307
“When can I retire?”........................................................................................ 309
“Where will the money come from?” ............................................................... 315
“How can I keep more of my retirement income?” .......................................... 357


Plus Files

File Number                        File Name                                                 Page Number
1     License Terms and Renewal, Revocation and Suspension ..................... +1
2     Case Studies: Suicide Exclusion and Incontestability .............................. +2
3     Reinsurance ........................................................................................... +4
4     R&C Term Insurance............................................................................... +5
5     Grace Period ........................................................................................... +8
6     ETI and RPU ........................................................................................... +9
7     Limited Payment Non-par Whole Life Insurance.................................... +10
8     Adjustable Premium Whole Life with Riders .......................................... +12
9     Comparison Between Term-to-100 and Whole Life ............................... +16
10 Case Study: Term-to-100 ...................................................................... +17
11 Universal Life Presentation.................................................................... +20

                                                                                                                              iii
12   Danger of Leveraging ............................................................................ +21
13   Guidelines for Selecting Investments .................................................... +22
14   Comparing Term, Whole Life, and Universal Life .................................. +25
15   Case Study: Universal Life .................................................................... +26
16   The GIB Rider ....................................................................................... +28
17   Disability Income Insurance................................................................... +29
18   Disability Income Insurance Riders ....................................................... +32
19   Case Study: A&S Insurance .................................................................. +33
20   Case Study: Critical Illness Insurance ................................................... +35
21   Case Study: Long-term Care Insurance ................................................ +37
22   Case Study: Term Insurance to Fund a Buy/Sell Agreement ................. +38
23   Case Study: Key Person Insurance ....................................................... +40
24   Group Life Policy Provisions .................................................................. +41
25   STD and EI ........................................................................................... +43
26   Comparison of Individual and Group Disability Income Insurance ......... +44
27   Group Disability Exclusions and Limitations .......................................... +45
28   Case Study: Integration of Disability Income Benefits............................ +46
29    Fraudulent Misrepresentation ............................................................... +47
30   Case Study: Joint and Last Survivor Universal Life ............................... +48
31   Classes of Beneficiaries ........................................................................ +50
32   Settlement Options ............................................................................... + 51
33   Comparing Definitions and Benefits of Individual and Group
        Disability Income Insurance ............................................................... +52
34   Taxation of Group Policies .................................................................... +53
35   Entire Contract ...................................................................................... +54
36   Right of Rescission................................................................................ +55
37   Suicide Exclusion Clause ...................................................................... +56
38   Misstatement of Age.............................................................................. +57
39   Incontestability ...................................................................................... +58
40   Coordination of Benefits ........................................................................ +59
41   Taxation of Investments ........................................................................ +61
42   Comparison Chart of Mutual Funds and Seg Funds .............................. +63
43   IVIC Maturity Guarantee ........................................................................ +64
44   IVIC Creditor Protection ........................................................................ +65
45   IVIC Withdrawals ................................................................................... +66
46   IVIC Investment ..................................................................................... +67
47   Case Study: Life Annuity ....................................................................... +69
48   Case Study: Life Annuity ....................................................................... +72
49   Case Study: Pre-retirement Planning .................................................... +74
50   Case Study: Pre-retirement Planning .................................................... +78
51   Case Study: Life Insurance for Retirement ............................................ +80
52   Life Insurance for Final Expenses ......................................................... +83
53   Spousal RRSP Contributions and Withdrawals ..................................... +84
54   Home Buyer’s Plan and Lifelong Learning Plan..................................... +85
55   Case Study: RRIF Withdrawal ............................................................... +86
56   Case Study: Transfer of a RRIF on Death ............................................. +87
57   Early and Late CPP Benefits ................................................................. +88
58   Case Study: Integrated Pension Benefits .............................................. +89
59   Splitting Income..................................................................................... +92
60   Spousal RRSP Calculation .................................................................... +93
61   Comparison of Deferred Annuities and GICs ......................................... +94

iv
Advantage LLQP



    -   INDEX -
ACB, see adjusted cost basis                       Basic promise 174
A&S insurance, see Accident and sickness           Beneficiaries 151-153
 insurance                                                  definition 6
Absolute assignment, definition 179                         segregated funds 267-268
Accelerated death benefit 66                       Benefit period, disability 73
Accident and sickness insurance                    Benefit, annuity 285, 286-290
         claim 293                                 Best earnings plans 340
         group 103                                 Blended rating 171
         personal 77-83                            Bonds 247-249
         taxation 203                                       definition 245
Accidental death and dismemberment                 Brokers 11
  64, 79, 99                                       Business insurance 85-96
         rider 76                                  Business overhead insurance 95
Accidental death benefit (ADB) 64                  Business risk 304
Accumulated value, definition 296                  Buy-sell agreement, definition 91
Active income 122
Actively-at-work provision 160                     Callable bond, definition 249
Activities of daily living (ADLs), definition 82   Canada Deposit Insurance Corporation (CDIC)
Actual authority, definition 16                     305
Adjustable premium whole life insurance 52-53,     Canada Education Savings Grant (CESG) 221
 file 8                                            Canada Pension Plan/Quebec Pension
Adjusted cost base, definition 127                  Plan 351-355
Adjusted cost basis 189-194                                 children’s benefit 105, 354
         definition 59                                      contributions 352-353
Administrative services only plans 172                      contributor’s benefit 105
Age adjustment 176                                          death benefit 354
Agency contract 16                                          definition 105
         definition 9                                       disability pension 107-108
Agent                                                       early and late benefit file 57
         duties 9                                           offset 209
         misconduct 23-29                                   survivor’s benefit 105
All sources maximum 201                                     survivor’s pension 354
Allocations, segregated fund 261, 282, 283                  tax 355
Allowance 351                                      Canada Savings Bonds 246
Amendment 163                                      Canadian Investor Protection Fund (CIPF) 305
         limited payment 197                       Cancelable policy 69
Annuitant 285                                      Capital, definition 116
Annuitant, segregated funds 267                    Capital gains 127-129, 238
Annuities 285-299                                           definition 88
         definition 226                                     tax 51, 128
         deferred annuities file 61                Capital loss 128
Any occupation 71                                           definition 88
Apparent authority, definition 16                  Capital needs approach 116, 117, 118-122
Assignment 179                                     Capital retention approach 116, 117, 118-122
Assuris 134-136, 305                               Capitalization of income approach 116, 117,118
Attained age, definition 43                        Career average earnings plans 340
Authority, types of 16                             Carry forward 322
Automatic premium loan 47                          Cash refund annuity 294, 295
Average monthly pensionable earnings (AMPE)        Cash surrender value 59, 315
 353                                                        definition 23
                                                            taxation 191
Back-end load 269                                  Cash values, taxation 188-194
Basic AD&D 104                                     Cash, as investment 244, 303
Basic exemption 353                                Certificate of insurance, definition 159

                                                                                                v
                                                                                            Index



Children’s benefit, Canada Pension Plan/    Default risk 304
 Quebec Pension Plan 105, 354               Deferred annuity
Churning, definition 26                              comparison with GICs file 61
Claims 182                                           definition 288
          definition 6                      Deferred profit-sharing plans (DPSPs) 345-347
          denial 208                        Deferred sales charge 269, 270
Clawback 350                                Defined benefit plan 339-342
Coercion 27                                 Defined contribution plan 342-344
Co-insurance 124, 158                       Demutalization 11
          definition 156                    Dental plans 78
Collateral assignment, definition 180                group 103
Collateral life insurance 167               Dependency period 114, 115
Commission                                           definition 33
          definition 23                     Dependent life 99
          splitting 25                      Deposit-based guarantee 263
Common mistake 139                          Derivatives 252
Compounding 216                             Disability income insurance, group 100-102
          definition 58                              definition 101
Confidentiality 22, 229                              taxation 201
Conflict of interest 27                     Disability income insurance, personal 68-76
Consideration 137, 174                               benefit calculation 123
Constructive notice 142                              benefit payments 72
Contestability 183                                   benefit period 73
Continuing expenses, definition 33                   buy-out insurance 96
Contract of adhesion 173                             claims 195-200
Contract, insurance 137                              definitions 7, 71
          provisions, definition 26                  elimination period 73
Contributory plan, definition 159                    qualification period 73
Conversion privilege 176                             riders 74-76
Coordination of benefits 204-207, file 40            taxation 200
Corporate repurchase 92                     Disability insurance, business 94-96
Corporations 88                             Disability pension, Canada Pension Plan/
Cost illustrations 146                       Quebec Pension Plan 107-108
Cost of living adjustment rider 75          Disability
Coverage, definition 8                               long-term, 102
Creditor protection 51-52, 61, 178, 264              short-term 101
Criminal law 132                            Disposition, definition 58
Criss-cross agreement 92                    Dividends 49-51, 238
Critical illness insurance 79-82                     corporate 130
Cross-purchase agreement 91, 92                      definition 46
CSV, see cash surrender value                        stock, definition 250
Currency risk 304                           Divorce 179
                                            Drug and alcohol questionnaire 145
Death benefit 186-190                       Due diligence, definition 20
        Canada Pension Plan/
        Quebec Pension Plan 105, 354        E&O, see errors and omissions insurance
        definition 39                       Earned income
        guarantee 261-263                             definition 68
        taxation 188                                  disability definition 122
Debenture, definition 249                             RRSP definition 123, 321
Debt investments 245-249                              tax definition 123
Decreasing term insurance 42                Effective date 174
Deductible 124                                        definition 40
        definition 156                      Eligibility period 161
        family 157                          Elimination period 73
        single 157                                    definition 196

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Advantage LLQP



Emergency fund, definition 114                   Government
Employee assistance programs 210                         insurance 105-111
Employment insurance 109-110                             retirement pensions 349-355
         reduced by short-term disability        Grace period 177, 182
             file 25                                     definition 47
Entire contract file 35                          Grandfathered policies 188
Equity investments 249-252, 303                  Group
         definition 244                                  AD&D exclusions 104
Errors and omissions insurance 28-29, 133                creditor life insurance 99-100
Estate, definition 32                                    disability income insurance 100-102
Estate planning 34, 51                                   exclusions file 27
         definition 32                                   health insurance, 102-103
Ethical conduct 10, 18-27                                insurance 97-104
Evidence of the contract 173                             insured, definition 159
Exclusions 180, 181, 183                                 life insurance 98-100
         group AD&D 104                                  policy provisions file 24
Exclusion rider 143, 165                                 premiums, taxation 172
Execution portion 174                                    taxation file 34
Experience rating 171                            Group retirement savings plans (GRSPs) 347
Expiry date, definition 39                       Guaranteed Income Supplement (GIS) 351
Extended elimination period 197                  Guaranteed insurability benefit (GIB) 63
Extended health care 77, 103                     Guaranteed Investment Certificates (GICs)
Extended term insurance 47                               definition 244
                                                 Guaranteed renewable policy 69
Face amount , definition 6, 40                   Guaranteed returns 240
Face page 174                                    Guarantees, segregated funds 261-263
         definition 40
Fair market value 127                            Hazardous sports and occupations questionnaire
Family deductible 157                             145
Fiduciary, definition 21                         Health insurance, see also accident and sickness
Fiduciary responsibility 228                      insurance
Final average earnings plans 340                          claim 203
Final expenses 51                                         definition 7
         definition 33                                    group, 102-103
Financial planning 233-242                                taxation 203
Financial risks 304                                       taxation of premium 170
Financial statements, segregated funds 273-274   Holding out 23
First-day hospital coverage rider 76             Home Buyer’s Plan 329, file 54
Fiscal policies, definition 241                  Human life value approach 116-118
Fixed annuity benefit 289
Fixed-income investments 303                     Immediate annuity 287
         definition 245                          Income splitting 359-362, file 59
Flat benefit plans 340                           Incontestability 178, 182, file 39
Forgery 141                                               definition 44
Forwards, definition 252                         Increasing term insurance 42
Four pillars 229-231                             Individual Variable Insurance Contracts, see
Fraternal organizations 12                         segregated funds
Fraud 140, 141, 195, file 29                     Inflation 227, 241
Front-end load 269                                        adjustment 117
Fully insured plans 171                                   indexing 345
Funding buy-sell agreement file 22                        risk 304
Future expenses 114, 115                         Information Folder 272-273
Future purchase option rider 74                  Innocent misrepresentation 140
Future value of money 237, 311                   Inspection report 145
Futures, definition 252                          Installment refund annuity 294, 295
Government insurance claims 209                  Insurable interest 148

                                                                                                vii
                                                                                                Index



Insurance contract, definition 6                      Life Income Funds (LIFs) 336-337
Insurance ombudsman 133-134                           Registered Retirement Savings Plans
Insurance                                              331-332
          business 85-96                              Retirement Accounts (LIRAs) 335
          group 97-104                                Retirement Income Fund (LRIF)
          personal 39-83                               337-338
Interest 238                                  Long-term care insurance 82-83
          taxation 126, 127                           definition 66
Interest rate risk 304                        Long-term disability, group 102
Investment objectives 226
Investment risk 59                            Managed investments 253-285
Investor Protection Corp. (IPC) 305           Manual rating 171
Irrevocable beneficiary 51                    Marginal tax rate 228
          definition 89                                definition 126
Issue and Participation Limits 182            Market risk 304
IVICs, see segregated funds                   Market value adjustment 297-299
                                              Master contract, definition 159
Joint and last survivor annuity 294, 295      Material change 184
Joint contract 150, file 30                   Material misrepresentation 139, 178
                                              Maturity guarantee 261-263, file 43
Key person                                    Maximum tax actuarial reserve (MTAR)
        definition 90                                     definition 189
        disability insurance 94               Meeting of the minds 138
        life insurance 93, file 23            MIB 144-145
                                              Minors 179
Lapse, definition 26                                   definition 138
Last acquired date 188                        Misrepresentation 24, 138, 139-140,173, file 29
Last expenses 114                             Misstatement of age file 39
LCOI, see Level cost of insurance             Mistakes 138-139, 173, 183
Legal capacity 138                            Monetary policy, definition 242
Level cost of insurance charge 56             Monthly disability income benefit 65
Level term insurance 41                       Morbidity
Leveraging file 12                                     rates 168, 169
Life annuity 291-294, 295, file 47, file 48            rating 182
Life Income Funds (LIFs) 336-337                       tables 168
Life insurance                                Mortality
         business 90-93                                charge 56
         group 98-100                                  rates 166
         personal 39-67                                rates, definition 163
         riders 62-67                                  risk, definition 43
Life insured, definition 6                             tables 166
Lifelong Learning Plan 330, file 54           Mutual funds 253-258
Lifetime injury rider 76                               comparison with segregated funds file
Lifetime sickness and injury rider 76                    42
Limited payment amendment 197                 Mutual mistake 139
Limited payment life, definition 45
Linear reduction method 278-279, file 45      Negligent misrepresentation 140
Liquidity 227                                 Net asset value, mutual funds, definition 254
         definition 226                       Net cost of pure insurance (NCPI) 189, 191
         risk 304                             Net death benefit 186-187
Living benefit rider 66                       No-load fund 269, 270
Loads 267-270                                 Nominal interest rate, definition 117
Locked-in                                     Nominal rate of return 241
         definition 320                       Non-cancellable and guaranteed renewable
         money purchase plan, see              policy 69
           defined contribution plan          Non-contributory plan, definition 159

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Advantage LLQP



Non-discriminatory benefits schedule 160             payments 176
Non-forfeiture options 47-48, 178                    rated 143
        definition 46                                rates 166
Non-refund method of funding 171                     rebating 27
Notional units 274                                   taxes 173
                                            Prescribed annuity 287-288
Occupational classifications 70, 169                 definition 287
Offer and acceptance 137                    Prescribed RRIF 337
Office of the Superintendent of Financial   Prescription drugs 78
 Institutions (OFSI) 13                     Present value of money, definition 166, 235
Offset 209                                  Presumptive disability 72, 199
OFSI, see Office of the Superintendent      PRIF 337
  of Financial Institutions                 Principal 16
Old Age Security 349-350                    Principal guarantee 261-263
Ongoing expenses 114, 115                   Principal residence 125
Optional group life 99                      Privacy 229
Options, definition 252                     Probate 263
Overinsurance 182                           Probationary period 161
          definition 68                     Proportional reduction method 278-279, file 45
Own occupation 71                           Provincial health services 111
                                            Provincial regulations 133
Paid-up additions 50, 51                    Provisions, policy 175-180
Parent waiver 67
Partial disability 72                       Qualification period 73
          benefit 198                       Qualitative goals, definition 116
Partnership 87-88                           Quantitative goals, definition 116
          interest, definition 87
          property, definition 87           R&C, see renewable and convertible
Pension                                      term insurance
          adjustment 322                    Rated contract 163-164
          sharing 358                       Rated premiums 143
          past service pension              Ratings 171
         adjustment 322                     Readjustment period 114
Pensionable earnings, 353                   Real rate of return 241
          definition 107                    Recurring disability benefit 199
Permanent insurance 45-67                   Redeemable, definition 245
          definition 35                     Redemption, rights 254
Personal contract 149                       Reduced paid-up insurance 48
Physical examination 182                    Refund accounting method of funding 172
Policy loan 46, 59, 177                     Registered Disability Savings Plan (RDSP) 222
          taxation 193                      Registered Education Savings Plans (RESPs)
Policy owner, definition 6                   220-222
Policy provisions 175-180                   Registered pension plans 338-348
Policy receipt 185                                   definition 315
Policy reserve 46                           Registered plans, definition 218
Policy-based guarantee 262                  Registered Retirement Income Funds (RRIFs)
Political risk 304                           332-334, file 55, file 56
Portability of pension 344                           withdrawals 333
Predictable risks 8                         Registered Retirement Savings Plans (RRSPs)
Pre-existing condition 156, 182              220, 317-331
          definition 69                              contributions 321-325
Preferred beneficiary 52                             definition 61
                                                     earned income 321, file 60
Premiums                                             locked-in 331-332
       definition 6                                  on death 327
       offset 50-51, 60                              overcontribution 323

                                                                                         ix
                                                                                           Index



         self-directed 317-319                   Self-insured plans 172
         spousal 323, 361, file 53               Settlement options 154-155, file 32
         withdrawals 325-326                               definition 40
Registered savings plans 317-331                 Short-term disability, group 100, 101
Regular occupation 71                            Simple contract 137
Regulatory bodies 13                             Single deductible 157
Rehabilitation benefit 75                        Sole proprietor, definition 85
Reinstatement 177                                Sole proprietorship 85-86
Reinsurance, definition 36, file 3               Special risks 163
Rejection of application 165                     Special term addition 50
Renewable term insurance 42                      Splitting income file 59
Renewable and convertible term insurance 43-     Spousal rollover 127
 44                                              Spousal RRSP 323, file 53
Renewal 182                                      Standard group, definition 159
Replacement 25                                   Stocks 249-252
         definition 23                           Stop-loss insurance 172
Rescission                                       Structured settlement annuity 299
         definition 83                           Subrogation 210
         right file 36                           Substandard risks 163-164
Reset 265-266                                    Suicide exclusion clause 176
         definition 265                                    definition 44
Residual disability 71                           Summary fact statement 273
         benefit 198                             Surrender, definition 23
Retention method of funding 171                  Survivor income plan 99
Retirement income tax 357-362                    Survivor life income needs 114, 115
Retirement planning 309-313                      Survivor’s pension, Canada Pension
         definition 32                            Plan/Quebec Pension Plan 105, 354
Retiring allowance 324                           Systematic risk 304
Retrospective rating 172
Return of premium rider 76                       Tax
Return, rates of 241                                      brackets 218
Riders                                                    Canada Pension Plan/Quebec
         definition 47                                      Pension Plan 355
         disability 74-76                                 credit, definition 167
         life insurance 62-67                             deduction, definition 167, 219
Right of redemption 254                                   group disability benefit 101
Right of withdrawal 254                                   investments file 41
Risk                                                      life policies 188-194
         avoidance 36                                     mutual funds 255
         management 35-37                                 retirement income 357-362
         tolerance 226, 239-240, 306                      segregated funds 266, 281-
         transfer 35                                       285
Risk-return chart 302                                     Tax-free savings account
RRSPs, see Registered retirement savings plans             (TFSA) 316-317
Rule of 72 217                                   Taxable income, definition 219
                                                 Tax-free savings account (TFSA) 316-317
Sales charge 268-270                             Temporary Insurance Agreement (TIA) 162
Schedule 174                                     Term addition 50
Segregated funds 259-285                         Term certain annuity 290-291
         comparison with mutual funds            Term deposit, definition 244
        file 42                                  Term insurance 39-44
         creditor protections file 44                     decreasing 42
         definition 49                                    definition 35
         maturity guarantee file 64                       increasing 42
         withdrawals file 45                              level 41
Self-directed RRSP 317-319                                renewable 42

x
Advantage LLQP



         renewable and convertible 43-44        Variable annuity 289-290
         rider 67                               Vesting 344
Terminal illness benefit rider 66                        definition 331
Term-to-100 insurance 53-54, file 9             Vision care 103
Theft 141                                       Void contract 137
Third-party contract 150                        Voidable contract 138
Three predicable risks 8                        Voluntary AD&D 104
TIA, see Temporary Insurance Agreement
Tied selling 24                                 Wage loss replacement plan 100
Time horizon 227                                Waiting period 161
Time value of money 234                         Waive/waiver, definition 65
Tort law 132-133                                Waiver of premium 75
Total disability                                        benefit 65
         claim 196                                      claim 202
         definitions 71                         Warrants, definition 252
Travel assistance 78                            Weekly income benefit 101
Treasury bills 247                              Weekly indemnity, definition 74
         definition 245                         Whole life insurance 45-53
Twisting, definition 26                                 definition 45
Two party contract, definition 65               Withdrawal
Types of contracts 149-150                              annuity 296-299
                                                        policy 60
Unbundling, definition 55                               rights 254
Underwriting 162-165                                    RRIF 333
         definition 12                                  RRSP 326
Undue influence 27                                      segregated fund 278-279
Unenforceable contract 138                              taxation 194
Unfair trade practices 27                       Worker’s compensation 106, 110
Uniform Life Insurance Act 13, 138, 148, 175,
 178, 179, 259                                  Yearly renewable term charge 56
Unilateral                                      Yearly renewable term insurance 98
         contracts 149                          Year’s maximum pensionable earnings (YMPE)
         mistake 139                             353
Universal life insurance 54-61                           definition 344
         death benefit 155                      Yield to maturity 238
         investments 58
                                                Zero-day qualifying rider 76




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