Case Study – Protecting the Family: Version 1.0.1, updated 20180724
Knowledge is expected of both FPSC Level 1® certificants and CFP® professionals.
This case contained errors in the mathematical calculations used in the ‘Life Insurance Needs Analysis’ chart. The following revisions were made to this case study under Version 1.0.1:
Rationale
- The case states that there is a family RESP which has $20,000 allocated to the seven year old child and $15,000 allocated to the five year old child. In the ‘Life Insurance Needs Analysis’ chart, when determining the amount of insurance required to protect each child’s education needs, $15,000 is used for child #1 and $20,000 is used for child #2.
- The case states Pat is age 33 and Leslie is age 35. They are planning to protect their lifestyle until they retire at age 65. In the ‘Life Insurance Needs Analysis’ chart, when calculating retirement needs for Pat if Leslie dies, N=34 is used for the number of years for Leslie to reach age 65.
Revisions
- In subscript 4, the amount of existing education funds has been changed to $20,000 for child #1. In subscript 5, the amount of existing education funds has been changed to $15,000 for child #2 to match the case facts. The Life Insurance Needs Analysis chart was revised accordingly.
- In subscript 6, when calculating retirement needs for Pat is Leslie dies, N=30 was used since Leslie is age 35 and is 30 years away from age 65. The Life Insurance Needs Analysis chart was revised accordingly
- The addition within each column was revised to reflect the changed amounts resulting from the corrections.
- On page 7, the amount of insurance coverage identified for Leslie was revised to $1.45 million
Case Study – Breaking a Mortgage in Favour of Lower Interest Rates: Version 1.0.1, updated 20180724
Knowledge is expected of both FPSC Level 1® certificants and CFP® professionals.
The following revisions were made to this case study under Version 1.0.1:
Rationale
An error was identified in the chart on page 4, Calculations for ‘Five-Year Fixed Mortgage’, where the last line of the chart was incorrectly identified as the principal remaining at the end of a five year term. In fact, the chart was showing the principal remaining at the end of two years, to provide a comparison to the previous chart, ‘Calculations for Two-Year Fixed Mortgage’.
Revision
Wording was changed in the last line of the five-year chart on page 4 to read “Principal remaining at end of two years”.
FP-BoK: Version 1.2.0, Updated 20180724
The following revisions were made to the FP-BoK under Version 1.2.0:
Sub-Topic: Financial Statements for a Business
Knowledge is expected of both FPSC Level 1® certificants and CFP® professionals.
Rationale
This sub-topic was previously titled “Financial Statements for an Organization”. “Organization” generally refers to both for-profit and non-profit entities. The word “Business” generally refers to for-profit entities. There exists a wide variety of financial statements for non-profit entities that can vary from standard generally accepted for-profit financial statements.
Revision
The word “organization” was replaced with the word “business” throughout this knowledge sub-topic.
Sub-Topic: Macroeconomics
Knowledge is expected of both FPSC Level 1® certificants and CFP® professionals.
Rationale
The scope of crypto-currencies is growing rapidly and digital currencies are widely available. However, understanding of the securitization, creation, regulation and taxation of these currencies is not as widespread. To adequately represent the unique knowledge associated with this form of money, a sub-topic has been added to the Body of Knowledge.
Revision
A new article, Foundations of Money, has been added with the following knowledge expectations:
- Explain the system that secures the modern money supply
- Identify the nature of digital currency, such as;
- Creation of digital money
- Securitization of digital money
- Regulation in Canada
- Treatment for tax purposes in Canada
- Risks of using digital money
Sub-Topic: Foundations of Investment; Sub-Topic: Investment Marketplace
Knowledge is expected of both FPSC Level 1® certificants and CFP® professionals.
Rationale
Online investment management companies are rapidly growing and gaining prominence. It was suggested that the knowledge topics related to “Fin-tech” would be better located within the Investment Marketplace sub topic.
Revision
The following knowledge expectation has been removed from Sub-Topic: Foundations of Investments and added to Sub-Topic: Investment Marketplace:
- Explain key trends currently affecting investment advice, such as;
- Growth and use of robo-advisors
- Fin-tech (financial technology) company offerings
- Channels through which advice is available
Sub-Topic: Basic Income for Tax Purposes
Knowledge is expected of both FPSC Level 1® certificants and CFP® professionals.
Rationale
The taxation of a Deferred Salary Arrangement (SDA) was added to the Body of Knowledge. A SDA is a common salary arrangement in some professions where sabbatical leave can be accrued. The taxation of the deferred income can have different treatment depending on whether the arrangement is designated as ‘prescribed’.
Revision
Under Income Received by Employees, the following knowledge expectation was added:
- Identify how a salary deferral arrangement (SDA) affects the taxation of income
Sub-Topic: Property and Casualty Insurance
Knowledge is expected of both FPSC Level 1® certificants and CFP® professionals.
Rationale
It was suggested that knowledge of identity theft insurance may not be adequately represented within the existing knowledge item of “cyber security insurance”. Cyber breach or data breach is when personal information is unintentionally exposed or disclosed. Identity theft is the application of the exposed data, using it to steal by mis-representing the personal information of another. Identity theft is commonly offered as a rider or as an inclusion to a homeowner or renter insurance policy.
Revision
Under Liability Insurance, the following knowledge expectation was added as follows:
Bolded, green text below was added.
- Identify types of liability insurance, such as:
- Commercial general liability insurance
- Professional liability insurance (errors and omissions)
- Cyber security insurance
- Identity theft insurance
- Environmental insurance
- Executor insurance
- Director insurance
FP-BoK: Version 1.1.0, Updated 20171206
The following revisions were made to the FP-BoK under Version 1.1.0:
Sub-Topic: Health Care Insurance Knowledge is expected of both FPSC Level 1® certificants and CFP® professionals.
Rationale
The Health Insurance section was changed to correct the way private health services plans (PHSPs) are represented. S. 248(1) of the Income Tax Act defines a PHSP as a:
- contract of insurance in respect of hospital expenses, medical expenses or any combination of such expenses, or
- medical care insurance plan or hospital care insurance plan or any combination of such plans except provincial and federal government health care insurance plans.
PHSPs are for reimbursement of expenses which would otherwise qualify as eligible medical expenses, including prescriptions, medical, dental, vision care and hospital expenses. PHSPs do not include employer-paid premiums for life, disability, critical illness or accidental death and dismemberment insurance nor in most cases employee assistance programs, unless the program is administered by authorized medical practitioners as defined by CRA.
Revision
Under Private Health Services Plans, the following knowledge expectation was revised as follows.
Bolded, green text below was added. Red, italicized text was removed.
Identify types of coverage generally provided by private health services plans, such as:
- Extended health coverage (above government-provided benefits)
- Prescription drug coverage
- Ambulance service coverage
- Increased level of hospital accommodation
- Out-of-country medically required care coverage
- Vision coverage
- Auditory coverage
- Paramedical services coverage
- Special medical supplies (E.g. Artificial limbs, prosthetics, medical equipment)
- Dental coverage
- Employee Assistance Programs, where services are provided by an authorized medical practitioner, as defined by the CRA
- Employee assistance programs (i.e. crisis intervention, counselling, health information)
- Short-term disability insurance
- Long-term disability coverage
- Life insurance
- Accidental death and dismemberment insurance
- Critical illness insurance
Sub-Topic: Foundations of Life Insurance
Knowledge is expected of both FPSC Level 1® certificants and CFP® professionals.
Rationale
The Foundations of Life Insurance section was clarified to reflect the opportunity to take an advance on a life insurance policy under certain circumstances, which may typically include situations of a shortened life expectancy.
Revision
Under Life Insurance Contracts, the following knowledge expectation was removed:
A revised knowledge expectation was added:
Sub-Topic: Advanced Uses of Life Insurance
Knowledge is expected of CFP® professionals only.
Rationale
The Advanced Uses of Life Insurance section was revised to include an awareness of life settlements.
Revision
Under Advanced Uses of Life Insurance, the following knowledge expectation was added:
- Identify that it may be possible to sell a life insurance policy to a third party, subject to jurisdictional legislation and regulation.