CFP FP512 Module 1 Exam
Verified Exam Questions and Answers Latest update 2026/2027
Question:
abandonment -
Answer:
involves surrendering ownership of damaged
property to the insurance company so that a total loss can be claimed
Question:
absolute liability -
Answer:
standard imposed when a person or organization
is held responsible for any damages, even when there has been no negligence
Question:
acceptance -
Answer:
A second party's unqualified willingness to go along
with the first party's proposal.
Question:
actual cash value (ACV) -
Answer:
replacement cost minus depreciation
Question:
adjuster -
Answer:
A representative of an insurance company who
investigates and acts on the behalf of the company to obtain agreements for the amount of the
insurance claim.
Question:
adverse selection -
Answer:
occurs when people with higher risk are more
likely to purchase insurance
, Question:
aleatory contract -
Answer:
one in which the outcome is controlled by
chance, and the dollars that change hands are often of substantially unequal amounts.
Question:
attractive nuisance -
Answer:
refers to something about a property (ie
swimming pool) that is likely to attract and possibly injure children
Question:
authority -
Answer:
the right to use power
Question:
bilateral -
Answer:
Contracts under which both parties have made
enforceable promises (I promise to paint the fence by Tuesday, and you promise to pay me $75)
Question:
broker -
Answer:
represents a prospective insured and generally cannot bind
the prospective insured to an insurance contract
Question:
captive agents -
Answer:
sell property and liability insurance for companies
that are known as direct writers.
Question:
career agents -
Answer:
usually life insurance agents in a general agency or a
company-owned office under the agency management or the branch office systems
Verified Exam Questions and Answers Latest update 2026/2027
Question:
abandonment -
Answer:
involves surrendering ownership of damaged
property to the insurance company so that a total loss can be claimed
Question:
absolute liability -
Answer:
standard imposed when a person or organization
is held responsible for any damages, even when there has been no negligence
Question:
acceptance -
Answer:
A second party's unqualified willingness to go along
with the first party's proposal.
Question:
actual cash value (ACV) -
Answer:
replacement cost minus depreciation
Question:
adjuster -
Answer:
A representative of an insurance company who
investigates and acts on the behalf of the company to obtain agreements for the amount of the
insurance claim.
Question:
adverse selection -
Answer:
occurs when people with higher risk are more
likely to purchase insurance
, Question:
aleatory contract -
Answer:
one in which the outcome is controlled by
chance, and the dollars that change hands are often of substantially unequal amounts.
Question:
attractive nuisance -
Answer:
refers to something about a property (ie
swimming pool) that is likely to attract and possibly injure children
Question:
authority -
Answer:
the right to use power
Question:
bilateral -
Answer:
Contracts under which both parties have made
enforceable promises (I promise to paint the fence by Tuesday, and you promise to pay me $75)
Question:
broker -
Answer:
represents a prospective insured and generally cannot bind
the prospective insured to an insurance contract
Question:
captive agents -
Answer:
sell property and liability insurance for companies
that are known as direct writers.
Question:
career agents -
Answer:
usually life insurance agents in a general agency or a
company-owned office under the agency management or the branch office systems
