CFP 512 PRACTICE EXAM QUESTIONS AND ANSWERS
WITH COMPLETE SOLUTIONS VERIFIED GRADED A+
What is the minimum for the deductible on a high deductible plan for an
individual and a family?
At least $1,200 for an individual and $2,400 for a family
Which of the following refers to the process of evaluating and classifying the risk
level of applicants for insurance?
A)
Underwriting
B)
Actuarial science
C)
Adverse selection
D)
Utilization review
A)
Underwriting
Choose the method of risk management that is implemented by a homeowner
who installs storm shutters.
,A)
Reduction
B)
Retention
C)
Transfer
D)
Avoidance
A)
Reduction
You have a meeting with Oscar, age 26, and his wife Judith, age 25, this afternoon
to review their risk management plan. They have two children, two cars, a home,
and a boat. Oscar works at the local bank, and Judith works at an engineering
firm. Identify the CORRECT statement(s) regarding their risk management plan.
They have a limited amount of liability exposure.
They have a higher probability of becoming disabled versus experiencing
premature death.
Having collision insurance on their cars is more important than liability coverage.
Long-term care insurance should not be a current priority within their risk
management plan.
A)
,I, II, and III
B)
II and IV
C)
IV only
D)
II, III, and IV
B)
II and IV
Oscar and Judith have unlimited liability exposure. A car accident could lead to an
unlimited amount of liability depending on the circumstances, as well as the possibility
of negligence occurring on their property. There is a higher probability of becoming
disabled than of experiencing premature death at their ages, and it is much more
important to have liability insurance on a vehicle than collision coverage. Liability claims
may be much higher than any type of collision damage to a vehicle. Both Oscar and
Judith are too young to consider long-term care insurance at this time.
Preston called Joanna, an insurance broker, to obtain coverage on his 30-foot
sailboat. Joanna told him to send in a binder premium of $75. She told him that by
doing so, he would be covered and that he should go ahead and enjoy the boat.
Joanna submitted an application for insurance to Boater's Insurance Corp. for
issuance of the policy. Boater's declined the coverage. The day Joanna learned
this, Preston called and told her a sudden wind caused him to lose control of his
, boat. He then smashed into another sailboat, causing substantial damage to both
boats.
Who will be responsible for the damages?
A)
Boater's Insurance Corp. will have to pay the damages since it did not notify
Preston that he was not covered.
B)
Boater's will have to pay since Joanna collected a premium from Preston.
C)
Preston will have to pay because no insurance policy is in force until the
insurance company accepts the risk.
D)
Joanna is responsible because, as a broker, she personally bound coverage for
Preston but was unable to place the coverage before the accident.
D)
Joanna is responsible because, as a broker, she personally bound coverage for Preston
but was unable to place the coverage before the accident.
Joanna will have to pay because, as a broker, she personally bound coverage for
Preston but was unable to place the coverage before the accident. Boater's Insurance
Corp. was never a party to an insurance contract with Preston. Since Joanna is a
WITH COMPLETE SOLUTIONS VERIFIED GRADED A+
What is the minimum for the deductible on a high deductible plan for an
individual and a family?
At least $1,200 for an individual and $2,400 for a family
Which of the following refers to the process of evaluating and classifying the risk
level of applicants for insurance?
A)
Underwriting
B)
Actuarial science
C)
Adverse selection
D)
Utilization review
A)
Underwriting
Choose the method of risk management that is implemented by a homeowner
who installs storm shutters.
,A)
Reduction
B)
Retention
C)
Transfer
D)
Avoidance
A)
Reduction
You have a meeting with Oscar, age 26, and his wife Judith, age 25, this afternoon
to review their risk management plan. They have two children, two cars, a home,
and a boat. Oscar works at the local bank, and Judith works at an engineering
firm. Identify the CORRECT statement(s) regarding their risk management plan.
They have a limited amount of liability exposure.
They have a higher probability of becoming disabled versus experiencing
premature death.
Having collision insurance on their cars is more important than liability coverage.
Long-term care insurance should not be a current priority within their risk
management plan.
A)
,I, II, and III
B)
II and IV
C)
IV only
D)
II, III, and IV
B)
II and IV
Oscar and Judith have unlimited liability exposure. A car accident could lead to an
unlimited amount of liability depending on the circumstances, as well as the possibility
of negligence occurring on their property. There is a higher probability of becoming
disabled than of experiencing premature death at their ages, and it is much more
important to have liability insurance on a vehicle than collision coverage. Liability claims
may be much higher than any type of collision damage to a vehicle. Both Oscar and
Judith are too young to consider long-term care insurance at this time.
Preston called Joanna, an insurance broker, to obtain coverage on his 30-foot
sailboat. Joanna told him to send in a binder premium of $75. She told him that by
doing so, he would be covered and that he should go ahead and enjoy the boat.
Joanna submitted an application for insurance to Boater's Insurance Corp. for
issuance of the policy. Boater's declined the coverage. The day Joanna learned
this, Preston called and told her a sudden wind caused him to lose control of his
, boat. He then smashed into another sailboat, causing substantial damage to both
boats.
Who will be responsible for the damages?
A)
Boater's Insurance Corp. will have to pay the damages since it did not notify
Preston that he was not covered.
B)
Boater's will have to pay since Joanna collected a premium from Preston.
C)
Preston will have to pay because no insurance policy is in force until the
insurance company accepts the risk.
D)
Joanna is responsible because, as a broker, she personally bound coverage for
Preston but was unable to place the coverage before the accident.
D)
Joanna is responsible because, as a broker, she personally bound coverage for Preston
but was unable to place the coverage before the accident.
Joanna will have to pay because, as a broker, she personally bound coverage for
Preston but was unable to place the coverage before the accident. Boater's Insurance
Corp. was never a party to an insurance contract with Preston. Since Joanna is a
