Free LLQP Ethics and Professional Practice (Common Law) Practice Questions

Sample Practice Questions

Try these 10 sample questions from the LLQP Ethics and Professional Practice (Common Law) practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1What is the main function of the Canada Pension Plan retirement pension?

   1. A.To replace part of retirement income through a taxable monthly benefitCorrect answer: A
   2. B.To reimburse prescription expenses through a tax-free annual benefit
   3. C.To guarantee investment principal through a taxable lump-sum benefit
   4. D.To replace employer severance through a tax-free monthly benefit

   Explanation: "The Canada Pension Plan (CPP) retirement pension is a monthly, taxable benefit that replaces part of your income when you retire." CPP supplies taxable monthly retirement income. The alternatives confuse it with drug reimbursement, investment protection and severance.

   Reference: Government of Canada: CPP retirement pension — Description of Canada Pension Plan retirement pension

2. 2Which function describes CISRO's ongoing role among Canadian insurance regulatory jurisdictions?

   1. A.Protecting policy benefits when a member life insurer becomes insolvent
   2. B.Providing communication and cooperation among member jurisdictionsCorrect answer: B
   3. C.Representing the commercial interests of member life and health insurers
   4. D.Reviewing individual life and health complaints impartially after an insurer's final position

   Explanation: "CISRO was created in the mid 1990’s as a conduit for communication among the member jurisdictions." CISRO provides communication and cooperation among regulatory jurisdictions. The competing descriptions confuse its role with insurer-failure protection, insurer-industry representation and individual complaint conciliation.

   Reference: CISRO: Who We Are — Who We Are

3. 3Under Ontario's Insurance Act, what is the minimum age at which a minor has adult capacity to enter an enforceable life insurance contract, apart from rights as a beneficiary?

   1. A.14 years
   2. B.16 yearsCorrect answer: B
   3. C.18 years
   4. D.19 years

   Explanation: "Except in respect of his or her rights as beneficiary, a minor who has attained the age of sixteen years has the capacity of a person of the age of eighteen years," Section 202 then applies that capacity to making and dealing with a contract. The minimum is 16, not the general age of majority or the other proposed ages.

   Reference: Ontario Insurance Act — s.202

4. 4What consumer-protection purpose does the CIRDA database developed by CISRO and CCIR serve?

   1. A.It centralizes insurers' annual financial statement filings
   2. B.It centralizes policyholders' outstanding death-benefit claims
   3. C.It centralizes applications for renewal of individual agent licences
   4. D.It centralizes licensee disciplinary decision documents nationallyCorrect answer: D

   Explanation: "centralized licensee disciplinary decision documents on a national level;" CIRDA consolidates disciplinary decisions. Financial returns, unresolved claims and licence-renewal applications are different regulatory records.

   Reference: CISRO: Who We Are — Who We Are, CIRDA project

5. 5An agency subject to PIPEDA wants to collect information for a stated insurance service. Which collection practice follows the limiting-collection principle?

   1. A.Collect any information a client has posted publicly
   2. B.Collect the information used by the agency's largest competitor
   3. C.Collect the information needed for the identified purposeCorrect answer: C
   4. D.Collect whatever might be useful for unspecified future services

   Explanation: "The collection of personal information must be limited to that which is needed for the purposes identified by the organization." Necessity for the identified purpose controls collection; publicity, competitor practice and speculative future utility do not establish that necessity.

   Reference: OPC: PIPEDA fair information principles — Principle 4 – Limiting collection

6. 6What is the Canadian Council of Insurance Regulators?

   1. A.An association and forum for insurance regulatorsCorrect answer: A
   2. B.An industry association representing life and health insurers
   3. C.An independent service reviewing individual insurance complaints
   4. D.A compensation organization protecting policyholders when an insurer fails

   Explanation: "The Canadian Council of Insurance Regulators (CCIR) is an association of insurance regulators." CCIR is a regulators’ association and forum. The alternatives describe insurer representation, complaint review and insurer-failure compensation rather than the association’s role.

   Reference: CCIR: Who We Are — Who We Are

7. 7Under PIPEDA's safeguards principle, what should guide the security protection applied to client information?

   1. A.The commission generated by the client
   2. B.The length of the client's relationship
   3. C.The number of products held by the client
   4. D.The sensitivity of the client's informationCorrect answer: D

   Explanation: "Personal information must be protected by appropriate security relative to the sensitivity of the information." Security must reflect information sensitivity. Commission, relationship length and product count are not substitutes for that criterion.

   Reference: OPC: PIPEDA fair information principles — Principle 7 – Safeguards

8. 8Which description correctly identifies CLHIA's role in Canada's life and health insurance sector?

   1. A.A court issuing binding judgments on disputed claims
   2. B.A government office issuing provincial agent licences
   3. C.A membership-based organization representing life and health insurersCorrect answer: C
   4. D.An ombudsman representing policyholders against insurers

   Explanation: "The CLHIA is a not-for-profit, membership-based organization that represents 99% of Canada's life and health insurance companies." CLHIA represents insurers as an industry association. That differs from courts, licensing authorities and complaint-review bodies.

   Reference: CLHIA: Official home page — Official organization description

9. 9An insurance agency subject to PIPEDA is about to collect a prospect's personal information. When must it identify the collection purposes?

   1. A.Before or at the time of collectionCorrect answer: A
   2. B.After the first policy renewal
   3. C.Only when the prospect requests access
   4. D.After the information is first disclosed

   Explanation: "The purposes for which the personal information is being collected must be identified by the organization before or at the time of collection." The timing requirement is before or at collection. Waiting for renewal, access or first disclosure misses that point.

   Reference: OPC: PIPEDA fair information principles — Principle 2 – Identifying purposes

10. 10How does FINTRAC's role relate to criminal investigations into money laundering?

    1. A.It analyzes reports and discloses relevant financial intelligence to investigative agenciesCorrect answer: A
    2. B.It prosecutes money-laundering charges itself instead of providing intelligence
    3. C.It adjudicates the accused's guilt after reviewing the financial reports
    4. D.It represents reporting insurers as defence counsel in a criminal trial

    Explanation: "When FINTRAC is satisfied that it has reasonable grounds to suspect that the information would be relevant to such investigations or prosecutions, it discloses this financial intelligence to law enforcement and/or intelligence agencies." FINTRAC supplies intelligence. Criminal prosecution, deciding guilt and representing an insurer as counsel are different functions in the justice process.

    Reference: FINTRAC: Mandate — Canada's anti-money laundering and anti-terrorist financing regime