LLQP (Life Licence Qualification Program) Practice Exam · Question
A personal non-registered permanent life insurance policy on Liam, a 40-year-old engineer in Montreal, has accumulated a Cash Surrender Value (CSV) of $80,000 and an Adjusted Cost Basis (ACB) of $60,000. Three years later, Liam decides to surrender the policy when the CSV is $95,000 and the ACB is $68,000. How much is the taxable policy gain upon surrender?
A taxable policy gain upon surrender is calculated as the Cash Surrender Value (CSV) minus the Adjusted Cost Basis (ACB). In this case, $95,000 (CSV) - $68,000
Start free practice for LLQP (Life Licence Qualification Program) Practice Exam
374 questions · no signup required · 40 free questions per day
Question: A personal non-registered permanent life insurance policy on Liam, a 40-year-old engineer in Montreal, has accumulated a Cash Surrender Value (CSV) of $80,000 and an Adjusted Cost Basis (ACB) of $60,000. Three years later, Liam decides to surrender the policy when the CSV is $95,000 and the ACB is $68,000. How much is the taxable policy gain upon surrender?
Answer options: ✅ $27,000
- $35,000
- $15,000
- $20,000
Correct answer: $27,000
Explanation: A taxable policy gain upon surrender is calculated as the Cash Surrender Value (CSV) minus the Adjusted Cost Basis (ACB). In this case, $95,000 (CSV) - $68,000 (ACB) = $27,000. This gain is fully taxable as income.
Start free practice for LLQP (Life Licence Qualification Program) Practice Exam
374 questions · no signup required · 40 free questions per day
More about LLQP (Life Licence Qualification Program) Practice Exam
Related Questions
- 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
- Universal life is:
- Sarah purchased a segregated fund contract with a 75% maturity guarantee. Her initial deposit was $100,000. Fi
More for LLQP (Life Licence Qualification Program) Practice Exam candidates
Study guides
Question explanations
- 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
Ready to practice?
Free, no signup required. Build a wrong-question list as you go.
Start Free LLQP (Life Licence Qualification Program) Practice Exam Practice →Related courses
Other Canadian certifications candidates often prepare for alongside this one.