LLQP (Life Licence Qualification Program) Practice Exam · Question
When calculating the Adjusted Cost Base (ACB) of a life insurance policy, what must be subtracted from the total premiums paid?
Under the CRA's rules for life insurance, the Net Cost of Pure Insurance (NCPI) is deducted from the premiums paid to determine the Adjusted Cost Base (ACB) of
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Question: When calculating the Adjusted Cost Base (ACB) of a life insurance policy, what must be subtracted from the total premiums paid?
Answer options:
- The total of all dividends received.
- The total of all policy loans outstanding. ✅ The cumulative Net Cost of Pure Insurance (NCPI).
- The interest earned on the cash value.
Correct answer: The cumulative Net Cost of Pure Insurance (NCPI).
Explanation: Under the CRA's rules for life insurance, the Net Cost of Pure Insurance (NCPI) is deducted from the premiums paid to determine the Adjusted Cost Base (ACB) of the policy.
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- A life insurance policy that offers lifelong coverage, a guaranteed death benefit, and a savings component tha
- Group benefits in Canada commonly include:
- Sarah, a 35-year-old marketing professional in Ontario, purchases a participating whole life insurance policy
- Mark, a 45-year-old business owner in British Columbia, has a Universal Life policy with a Level Cost of Insur
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