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| Section | Weight | Objectives |
|---|---|---|
| Technical Competencies | 84% | - Retirement Planning - Estate Planning - Risk Management and Insurance - Investment Planning - Tax Planning - Asset and Liability Management |
| Enabling Competencies | 16% | - Client Relationship and Practice Management - Professional Conduct and Regulatory Compliance |
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NEW QUESTION # 76
Barbara, age 50, is meeting with her financial planner, Clark. Barbara has been hired as the Chief Executive Officer of a very successful privately owned business. Her salary will be $200,000 annually, plus a bonus.
Which retirement savings option should Clark recommend for Barbara?
Answer: A
Explanation:
An individual pension plan is the appropriate retirement savings option for Barbara. She is age 50, will earn a high salary as CEO of a successful privately owned business, and is likely in a position where an employer- sponsored defined benefit style arrangement can provide enhanced retirement funding. IPPs are particularly useful for older, high-income incorporated business owners or executives because permitted contributions can exceed RRSP limits under actuarial funding rules. A retirement compensation arrangement can supplement retirement benefits for very high earners, but the standard AFP recommendation in this fact pattern is the IPP.
A general defined benefit plan is not as targeted as an individual pension plan, and a deferred profit-sharing plan is usually less appropriate for maximizing retirement savings for a specific senior executive.
Implementation requires actuarial, legal, and tax administration. Study Guide focus: individual pension plans, executive retirement planning, incorporated businesses, RRSP limits, and tax-assisted savings. The recommendation should be confirmed with actuarial and tax advice because IPPs carry formal funding and administration rules.
NEW QUESTION # 77
A client wants a policy that pays a lump sum if she is diagnosed with a covered serious illness and survives the required waiting period. Which product matches this need?
Answer: D
Explanation:
Critical illness insurance is structured around diagnosis, survival period, and a lump-sum benefit. It is not designed primarily to replace monthly employment income; it provides capital that the insured can use for treatment costs, debt reduction, time away from work, travel, home modifications, private care, or family support. Option A is different: long-term care insurance responds to loss of independence, inability to perform activities of daily living, or cognitive impairment requiring care. Option B replaces income when a disability prevents work, usually through periodic benefits. Option C pays on accidental death and does not assist a living insured who survives a serious illness. In a planning file, the product should be tested against existing disability coverage, emergency reserves, debt obligations, family support needs, and affordability. Policy wording matters: covered conditions, exclusions, definitions, survival period, recurrence provisions, and return-of-premium options should be reviewed. References/topics: critical illness insurance, health risk, lump- sum benefit, insurance needs analysis.
NEW QUESTION # 78
Richard pays periodic spousal support and child support under a written separation agreement. Which statement is generally correct?
Answer: B
Explanation:
Tax treatment depends on the type of support. Periodic spousal support paid under a qualifying written agreement or court order is generally deductible to the payer and taxable to the recipient. Child support is generally not deductible to the payer and not taxable to the recipient. Option B wrongly treats child support like deductible spousal support. Option C confuses payment frequency with tax character; monthly payment does not make child support taxable. Option D is plainly incorrect because spousal support can materially affect after-tax cash flow for both parties. A financial planner should distinguish periodic support from lump- sum settlements, property transfers, arrears, legal fees, and combined agreements because classification changes projections. The planner should also ensure tax assumptions follow the wording of the agreement and should recommend legal or tax advice where facts are unclear. The planning result is measured on after-tax cash flow, not simply the gross support amount. References/topics: support payments, divorce planning, cash flow, tax deductibility.
NEW QUESTION # 79
Sunil and Shashi are married and both age 45. Each is the personal care Power of Attorney (POA) for the other. They have no children. Shashi would like to revise the personal care POA to ensure that it reflects her medical wishes. How should their financial planner advise Shashi to help her achieve her goal?
Answer: B
Explanation:
Shashi already has a personal care power of attorney; her issue is that she wants the document framework to reflect her medical wishes. A living will, advance directive, or health-care directive records instructions about treatment preferences, end-of-life care, and medical decisions if she is unable to communicate. It gives guidance to the appointed attorney for personal care rather than merely naming the decision-maker. Using a last will and testament would not solve the problem because a will operates at death, not during incapacity.
Appointing an alternate attorney may provide backup authority but does not describe Shashi's specific medical wishes. Replacing Sunil with another attorney also changes who decides; it does not document what Shashi wants. The planner should recommend that she speak with legal counsel to ensure the directive is valid under the applicable provincial rules and coordinated with the POA. Study Guide focus: incapacity planning, personal care POA, living wills, and estate planning documents.
NEW QUESTION # 80
Owen and Lina are looking to purchase a home in the next few months. Owen is the primary income earner for the family. His credit history is weak with several recently paid collections Lina has a perfect credit record but limited income and irregular employment. What will their financial planner advise them about the impact their credit ratings will have on their ability to secure a mortgage?
Answer: C
Explanation:
The weak credit history of the primary income earner is the central mortgage issue. Lenders assess income, debt service ratios, down payment, property, and creditworthiness. Owen supplies the main income needed to qualify, but his recent collections create underwriting risk even if they have been paid. Lina's strong credit record helps the household profile, but it does not fully offset limited income and irregular employment. Paid collections may improve the application compared with unpaid collections, yet they do not automatically qualify the borrowers. Lina's low income alone may not prevent approval if Owen qualifies, but his credit weakness may. The planner should advise them to review the credit bureau, correct errors, reduce revolving debt, avoid new inquiries, and allow time for stronger repayment history before applying. Study Guide focus:
mortgage qualification, credit history, debt service capacity, borrower risk, and liability management. The advice should be delivered before a formal application so avoidable bureau damage and failed underwriting can be reduced.
NEW QUESTION # 81
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