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

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

Question:
1. Risk Possibility of loss
Answer:


Question:
2. Peril Cause of a loss
3. Hazard Condition that increases
chance of loss from a giv-
en peril
Answer:


Question:
4. Adverse Selection Blocking poorer-than-av-
erage risks from seeking
greater extent of insur-
ance than the average
Answer:


Question:
5. What are the 4 elements of insurable risk? 1) Suflciently large #
of homogenous exposure
units to make losses rea-
sonable predictable
Answer:


Question:
2) Loss must be definite &
measurable
Answer:

,Question:
3) Loss must be fortuitous
or accidental
Answer:


Question:
4) Loss must not be
catastrophic to insurance
company
Answer:


Question:
6. Self Insurance Formal program of risk re-
tention
Answer:


Question:
Formal fund for future
losses & possible fluctua-
Answer:
tions

Question:
Primarily used by large
companies
Answer:


Question:
7. Reinsurance
strophic loss by self-insur-
ing up to certain amount
and acquiring insurance
for rest
Answer:
Mitigating risk of cata-

,Question:
"Stop loss"
Answer:


Question:
8. What are the 5 responses to risk?
Answer:
1) Avoidance

Question:
2) Diversification
Answer:


Question:
3) Reduction
Answer:


Question:
4) Retention
Answer:


Question:
5) Transfer/Sharing
Answer:


Question:
Severity; probability
9. is more important that
.
10. What is proper risk response for: High Severity | Low Transfer
Frequency?
Answer:

, Question:
11. What is proper risk response for: High Severity | High Avoidance
Frequency?
12. What is proper risk response for: Low Severity | High Retention/Reduction
Frequency?
Answer:


Question:
13. What is proper risk response for: Low Severity | Low
Frequency?
Answer:
Retention

Question:
14. Principle of Indemnity
burse insured for exact
amount of loss
Answer:
Insurer seeks to reim-

Question:
15. Insurable Interest must exist at time of for Loss
property & casualty.
Insurable Interest must exist at time of for Issue
life.
Answer:


Question:
16. Is insurance contract unilateral or bilateral?
Only 1 party makes bind-
ing promise that if broken
breaches contract
Answer:
Unilateral

Question:
Contract is accepted as is
17. Adhesion