CFP 512 Exam with all Correct & 100% Verified
Answers |Actual Complete Exam |Already Graded
A+ (Just Released)
What is the minimum for the deductible on a high deductible plan for an individual and a
family? ✔Correct Answer-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 ✔Correct Answer-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 ✔Correct Answer-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 ✔Correct Answer-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 respo ✔Correct Answer-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 broker, her actions only speak for herself.
There is no insurance coverage in force. Preston will need to make a claim against Joanna, which
will likely be reviewed by her Errors and Omissions carrier. If Preston sues and wins, Joanna also
could be held personally liable.
Which of the following are duties of the courts in regulating insurers?
To render decisions on the meaning of policy terms
To enact laws that govern the conduct of insurers
To rule on the constitutionality of insurance laws
To determine requirements an insurer must meet to obtain a license
A)
I and IV
B)
I and III
C)
III and IV
D)
II and IV ✔Correct Answer-B)
I and III
The answer is I and III. The courts render decisions on the meaning of policy terms and rule on
the constitutionality of insurance laws. The state legislature completes the remaining two
duties: enacts laws and may establish requirements that an insurer must meet to obtain a
license to do business in that state.
The insurance industry is regulated primarily by
A)
the federal government.
B)
the Supreme Court.
C)
the National Association of Insurance Commissioners (NAIC).
D)
the individual states. ✔Correct Answer-D)
the individual states.
The answer is the individual states. Under the McCarran-Ferguson Act of 1945, insurance is
regulated primarily at the state level. The NAIC issues model insurance legislation that the
, individual states are free to adopt if they choose, but the NAIC has no legislative authority in
any state.
Which one of the following is the correct definition of a term related to risk management?
A)
Risk: something that causes a loss
B)
Moral hazard: something that increases the likelihood of risk due to indifference
C)
Peril: the possibility of loss occurring
D)
Hazard: something that increases the likelihood of a loss occurring ✔Correct Answer-D)
Hazard: something that increases the likelihood of a loss occurring
The answer is hazard: something that increases the likelihood of a loss occurring. Risk is the
possibility of loss and perils are the causes of losses. Moral hazard is a result of the client being
unethical or misrepresenting himself in order to obtain insurance or to induce the payment of a
claim.
Carmen and David received eight place settings of their sterling silver flatware pattern as
wedding presents. Because the silverware cost nearly $500 per place setting, they wanted to
make sure it was adequately insured. The couple called Jerry, an agent with Forest Insurance
Co., and asked him what needed to be done to ensure that they had adequate insurance
coverage. Jerry assured them that because they had less than 10 place settings, they were
adequately insured.
If the silverware is stolen, which one of the following legal remedies will most likely be used to
assure the loss is covered?
A)
Rescission
B)
Last clear chance
C)
Waiver doctrine
D)
Doctrine of estoppel ✔Correct Answer-D)
Doctrine of estoppel
Jerry, representing Forest Insurance Co., made a statement on which Carmen and David relied.
This represents the doctrine of estoppel. The insurance company cannot later state that the
agent made a mistake and deny the claim. Waiver doctrine is used in the instance where, if the
insurance company failed to exert its right to deny one claim, it may not later exert that right
Answers |Actual Complete Exam |Already Graded
A+ (Just Released)
What is the minimum for the deductible on a high deductible plan for an individual and a
family? ✔Correct Answer-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 ✔Correct Answer-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 ✔Correct Answer-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 ✔Correct Answer-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 respo ✔Correct Answer-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 broker, her actions only speak for herself.
There is no insurance coverage in force. Preston will need to make a claim against Joanna, which
will likely be reviewed by her Errors and Omissions carrier. If Preston sues and wins, Joanna also
could be held personally liable.
Which of the following are duties of the courts in regulating insurers?
To render decisions on the meaning of policy terms
To enact laws that govern the conduct of insurers
To rule on the constitutionality of insurance laws
To determine requirements an insurer must meet to obtain a license
A)
I and IV
B)
I and III
C)
III and IV
D)
II and IV ✔Correct Answer-B)
I and III
The answer is I and III. The courts render decisions on the meaning of policy terms and rule on
the constitutionality of insurance laws. The state legislature completes the remaining two
duties: enacts laws and may establish requirements that an insurer must meet to obtain a
license to do business in that state.
The insurance industry is regulated primarily by
A)
the federal government.
B)
the Supreme Court.
C)
the National Association of Insurance Commissioners (NAIC).
D)
the individual states. ✔Correct Answer-D)
the individual states.
The answer is the individual states. Under the McCarran-Ferguson Act of 1945, insurance is
regulated primarily at the state level. The NAIC issues model insurance legislation that the
, individual states are free to adopt if they choose, but the NAIC has no legislative authority in
any state.
Which one of the following is the correct definition of a term related to risk management?
A)
Risk: something that causes a loss
B)
Moral hazard: something that increases the likelihood of risk due to indifference
C)
Peril: the possibility of loss occurring
D)
Hazard: something that increases the likelihood of a loss occurring ✔Correct Answer-D)
Hazard: something that increases the likelihood of a loss occurring
The answer is hazard: something that increases the likelihood of a loss occurring. Risk is the
possibility of loss and perils are the causes of losses. Moral hazard is a result of the client being
unethical or misrepresenting himself in order to obtain insurance or to induce the payment of a
claim.
Carmen and David received eight place settings of their sterling silver flatware pattern as
wedding presents. Because the silverware cost nearly $500 per place setting, they wanted to
make sure it was adequately insured. The couple called Jerry, an agent with Forest Insurance
Co., and asked him what needed to be done to ensure that they had adequate insurance
coverage. Jerry assured them that because they had less than 10 place settings, they were
adequately insured.
If the silverware is stolen, which one of the following legal remedies will most likely be used to
assure the loss is covered?
A)
Rescission
B)
Last clear chance
C)
Waiver doctrine
D)
Doctrine of estoppel ✔Correct Answer-D)
Doctrine of estoppel
Jerry, representing Forest Insurance Co., made a statement on which Carmen and David relied.
This represents the doctrine of estoppel. The insurance company cannot later state that the
agent made a mistake and deny the claim. Waiver doctrine is used in the instance where, if the
insurance company failed to exert its right to deny one claim, it may not later exert that right
