Free CFP® Exam MCQs – Risk Management and Insurance Planning

Do you want to improve your CFP® exam performance? Then do not make the mistakes that some candidates make. In their initial stages of preparation, some aspirants stick to completing the syllabus and avoid practicing test questions in between. But we advise CFP® exam aspirants to practice questions as soon as they are done with a particular topic. This is important to know if you really understood the topic or not. CFP® Exam Prep by Achieve provides you with ten practice questions from the topic – Risk management and insurance planning, to help you gauge how well you understood it.

Q1. Group paid-up life insurance is a combination of:

A. Decreasing units of permanent insurance and increasing units of group term life insurance

B. Decreasing units of permanent insurance and decreasing units of group term life insurance

C. Increasing units of permanent insurance and increasing units of group term life insurance

D. Increasing units of permanent insurance and decreasing units of group term life insurance

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Q2. What is the maximum amount of coverage a dependent may get under dependent group life insurance?

A. 50% of the coverage on the employee

B. An amount equal to the coverage on the employee

C. Twice the amount of the coverage on the employee

D. $200,000

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Q3. Which of the following statements about group term life insurance is false?

A. A policy that is not considered carried by the employer has no tax consequences to the employee

B. Any amount of coverage over $50,000 is considered a taxable fringe benefit

C. There are no tax consequences if the total amount of the policies is $500,000 or less

D. There are no tax consequences if the total amount of the policies does not exceed $50,000

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Q4. What is the maximum amount a terminated employee can pay for continuation coverage for the Consolidated Omnibus Budget Reconciliation Act (COBRA)?

A. 102% of the overall cost of providing coverage to employees

B. 75% of what the employee was paying while employed

C. 50% of the employer’s contribution to the employee’s insurance

D. 100% of the amount the employee was paying while employed

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Q5. In a defined benefit plan, how much life insurance may the plan trustee apply for if a participant’s estimated pension payout is $1,500 per month?

A. $150,000

B. $120,000

C. $200,000

D. $100,000

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Q6. At what point does property and casualty insurance become insurable?

A. At any point during the time the insured is covered

B. After the agreement between the insurer and the insured is terminated

C. Before the insurance takes effect

D. When the policy is written and when the loss is claimed

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Q7. Tom is a psychiatrist with two children and a wife. He isn’t particularly good at saving money, so he wants to get a life insurance policy that would cover him for the rest of his life and push him to save money. Which of the following is Tom’s best choice?

A. 15-year term life insurance

B. Whole life insurance

C. Variable universal life insurance

D. Irrevocable life insurance

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Q8. Lucy just started working in a manufacturing facility. She wants to protect herself against total disability and also wants to protect herself against reduced wages if she has a partial disability. Which of the following should Lucy make sure to include in her disability policy?

A. Residual disability benefits

B. Cost-of-living adjustment

C. Waiver of premium

D. Change-of-occupation provision

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Q9. Which of the following is a moral hazard?

A. Fabricating a story about a loss

B. Leaving a gas stove on and unattended

C. Refusing to remove ice from the sidewalk in front of a home

D. Trying to convince an insurance company that a loss is worth more than it is

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Q10. What is the difference between waiver and estoppel?

A. Waiver is done on an informal basis, and estoppel takes effect on a formal legal basis

B. Waivers apply to health insurance, and estoppels apply to auto and home insurance

C. Waiver is the voluntary surrender of a right, and estoppel is when one party represents to the other that it will not exercise certain legal rights

D. Waiver is used when one party asserts it will not exercise certain legal rights, and estoppel is the voluntary giving up of rights

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CFP® exam aspirants are advised to attempt mock tests of easy, intermediate, and advanced difficulty levels. This will help you not be overwhelmed by the Certified Financial Planner question paper in the exam hall. You can solve topic-wise questions from the CFP® Exam Prep by Achieve to comprehend the various types of MCQs asked and your understanding of the topic.