CFP Exam Verified Exam Questions and Answers Latest update 2026/2027

CFP Exam
Verified Exam Questions and Answers Latest update 2026/2027

Question:
Risk -
Answer:
the possibility of a loss, or a negative deviation from a
desired outcome

Question:
Peril -
Answer:
the cause of that loss

Question:
Hazard -
Answer:
increases the potential for a loss

Question:
Static Risks -
Answer:
result from factors other than changes in the
economy, Ex: earthquake or flodd

Question:
Dynamic Risks -
Answer:
result of the changes in the economy, such as
changes in the business cycle or inflation

Question:
Fundamental Risks -
Answer:
affect a large group of people, Ex: earthquake
and recession

Question:
Particular Risk -

,Answer:
affect individuals or small group

Question:
Pure Risk -
Answer:
involves only the chance of loss or no loss, no chance
of gain

Question:
Speculative Risk -
Answer:
involves both the chance of loss and gain, ex:
gambling

Question:
Risk Management Process -
Answer:
1. Identify and Establish Risk
Management Goals

2. Gather Pertinent Data to Determine Risk Exposures
3. Analyze and Evaluate the Information to Identify Risk Exposures

4. Develop a Risk Management Plan

5. Communicate the Recommendations

6. Implement the Recommendations

7. Monitor the Recomendations for needed changes

Question:
Risk Control -
Answer:
seeks to minimize risk of loss

Question:
Risk Financing -
Answer:
pays the costs of losses incurred

,Question:
Law of Large Numbers -
Answer:
must be a large number of potential losses
so that the insurer can reasonably apportion the expected financial loss

Question:
Insurable Interest -
Answer:
when the interested party will suffer a financial
loss if the insured loss occurs

Question:
Coinsurance -
Answer:
may be a splitting of costs, or a minimum percentage
of insurance that is required to avoid being penalized

Question:
Subrogation -
Answer:
right of an insurance company that has paid for a loss
to recover its payments if its determined that a different insurance company is responsible for the
loss from collecting twice for the same loss

Question:
Independent Agents -
Answer:
respresent several insurance companies doing
business under the American agency system

Question:
Captive Agents -
Answer:
represent only one company or group

Question:
Career Agents -

, Answer:
usually life insurance agents in a general agency,
often maintain selling contracts with other companies to better serve clients

Question:
Producing General Agents -
Answer:
produce the majority of their income
by selling insurance personally, do not have specified territories, have authority to hire agents to
work for them

Question:
Broker -
Answer:
individuals who are licensed with and represent many
insurers

Question:
Surplus and excess line Brokers -
Answer:
handle any type of insurance that
cannot be purchased using normal distribution channels within a given state

Question:
Express Authority -
Answer:
specifically bestowed on the agent

Question:
Implied Authority -
Answer:
not expressly granted but assumed to have in
order to transact

Question:
Apparent Authority -
Answer:
appearance of authority based on the actions,
words, or deeds of the agent/insurer