CFP 512 Final Exam
Verified Exam Questions and Answers Latest update 2026/2027
Question:
Whole life policy illustrations -
Answer:
Exhibit all of the following except
anticipated earnings in variable subaccounts.
Question:
Dividend option -
Answer:
Paid-up additions
Question:
Extended term policy for Antonio -
Answer:
Allows the policy to last past a
normal life expectancy, with the full death benefit going to heirs without additional out-of-pocket
expenses if the insured passes away within the extended term period.
Question:
Accelerated death benefit rider -
Answer:
Pays a portion of the death benefit
to an individual deemed terminally ill, usually with a life expectancy of 24 months or less.
Question:
Policy illustrations -
Answer:
Footnotes should be evaluated as an integral
part of the illustration. Guaranteed columns present a worst-case scenario assuming highest
mortality and expense charges along with the highest interest rate.
Question:
Deferred annuity -
Answer:
One in which the first benefit payment is made
one payment interval after the date of purchase.
,Question:
Flexible premium deferred equity-indexed annuity -
Answer:
An annuity
allowing variable premium payments and offering a guaranteed minimum return with returns
linked to the stock market.
Question:
Dividend option creating income tax liability -
Answer:
Accumulate at
interest
Question:
Considerations for reviewing an existing life insurance policy -
Answer:
Client's risk tolerance level, existing policy's relative value, companies' ratings,
possible changes in client's insurability.
Question:
Interest only settlement option -
Answer:
Pays interest annually on the
outstanding policy loan amount, with the remaining amount going to the beneficiary.
Question:
Life insurance needs calculation for college funding -
Answer:
Approximately $107,568 to assure adequate funds for college tuition with
specified inflation and after-tax earnings.
Question:
Economic assumption for life insurance needs -
Answer:
The inflation rate
Question:
Favorable tax treatment of life insurance contracts -
,Answer:
Death benefits
to beneficiaries are not usually taxable, income taxes on investment gains are tax-deferred,
earnings on cash value are not taxed during accumulation.
Question:
Limited-pay whole life insurance policies -
Answer:
Require shorter
premium payments than traditional whole life policies, provide lifetime coverage, and have cash
value accumulation.
Question:
Disadvantages of annual renewable term life insurance -
Answer:
Does not
develop cash values, becomes uneconomical with age, may lead to declination for renewal,
initially has higher premiums than whole life insurance.
Question:
Whole life insurance nonforfeiture options -
Answer:
Allow surrender for
net cash value, stop premium payments for reduced paid-up policy, or use net cash value for a
paid-up term policy.
Question:
Life insurance dividend option -
Answer:
Cash
Question:
Appropriate life insurance policy for lower premiums based on health -
Answer:
Reentry term
Question:
Personal risk exposures covered by life insurance -
, Answer:
Include
premature death before debt repayment, children's education payment, spouse outliving annuity,
and long-term care.
Question:
Death benefit calculation for Daniele's son -
Answer:
$725,000
Question:
Registered Indexed-Linked Annuities (RILAs) -
Answer:
Ordered from
most-to-least conservative as EIAs, RILA-floor, and then RILA-buffer.
Question:
Variable universal life insurance -
Answer:
Contains investment options,
adjustable premium payments and death benefits, allows tax-free policy loans and taxable cash
value withdrawals, but may lag returns of universal life policies.
Question:
Contestable period -
Answer:
The period during which the owner is allowed
to pay an overdue premium.
Question:
Section 1035 exchange -
Answer:
Allows tax-free exchange of certain
policies.
Question:
Policy Replacement -
Answer:
Replacing an existing policy with a new one,
considering initial costs and incontestable clause
Verified Exam Questions and Answers Latest update 2026/2027
Question:
Whole life policy illustrations -
Answer:
Exhibit all of the following except
anticipated earnings in variable subaccounts.
Question:
Dividend option -
Answer:
Paid-up additions
Question:
Extended term policy for Antonio -
Answer:
Allows the policy to last past a
normal life expectancy, with the full death benefit going to heirs without additional out-of-pocket
expenses if the insured passes away within the extended term period.
Question:
Accelerated death benefit rider -
Answer:
Pays a portion of the death benefit
to an individual deemed terminally ill, usually with a life expectancy of 24 months or less.
Question:
Policy illustrations -
Answer:
Footnotes should be evaluated as an integral
part of the illustration. Guaranteed columns present a worst-case scenario assuming highest
mortality and expense charges along with the highest interest rate.
Question:
Deferred annuity -
Answer:
One in which the first benefit payment is made
one payment interval after the date of purchase.
,Question:
Flexible premium deferred equity-indexed annuity -
Answer:
An annuity
allowing variable premium payments and offering a guaranteed minimum return with returns
linked to the stock market.
Question:
Dividend option creating income tax liability -
Answer:
Accumulate at
interest
Question:
Considerations for reviewing an existing life insurance policy -
Answer:
Client's risk tolerance level, existing policy's relative value, companies' ratings,
possible changes in client's insurability.
Question:
Interest only settlement option -
Answer:
Pays interest annually on the
outstanding policy loan amount, with the remaining amount going to the beneficiary.
Question:
Life insurance needs calculation for college funding -
Answer:
Approximately $107,568 to assure adequate funds for college tuition with
specified inflation and after-tax earnings.
Question:
Economic assumption for life insurance needs -
Answer:
The inflation rate
Question:
Favorable tax treatment of life insurance contracts -
,Answer:
Death benefits
to beneficiaries are not usually taxable, income taxes on investment gains are tax-deferred,
earnings on cash value are not taxed during accumulation.
Question:
Limited-pay whole life insurance policies -
Answer:
Require shorter
premium payments than traditional whole life policies, provide lifetime coverage, and have cash
value accumulation.
Question:
Disadvantages of annual renewable term life insurance -
Answer:
Does not
develop cash values, becomes uneconomical with age, may lead to declination for renewal,
initially has higher premiums than whole life insurance.
Question:
Whole life insurance nonforfeiture options -
Answer:
Allow surrender for
net cash value, stop premium payments for reduced paid-up policy, or use net cash value for a
paid-up term policy.
Question:
Life insurance dividend option -
Answer:
Cash
Question:
Appropriate life insurance policy for lower premiums based on health -
Answer:
Reentry term
Question:
Personal risk exposures covered by life insurance -
, Answer:
Include
premature death before debt repayment, children's education payment, spouse outliving annuity,
and long-term care.
Question:
Death benefit calculation for Daniele's son -
Answer:
$725,000
Question:
Registered Indexed-Linked Annuities (RILAs) -
Answer:
Ordered from
most-to-least conservative as EIAs, RILA-floor, and then RILA-buffer.
Question:
Variable universal life insurance -
Answer:
Contains investment options,
adjustable premium payments and death benefits, allows tax-free policy loans and taxable cash
value withdrawals, but may lag returns of universal life policies.
Question:
Contestable period -
Answer:
The period during which the owner is allowed
to pay an overdue premium.
Question:
Section 1035 exchange -
Answer:
Allows tax-free exchange of certain
policies.
Question:
Policy Replacement -
Answer:
Replacing an existing policy with a new one,
considering initial costs and incontestable clause
