CFP 512 Exam Prep Review UPDATED ACTUAL Questions and CORRECT
Answers
1. Peril cause of loss
2. Hazard is a condition that increases the probability a loss will occur
3. Physical Hazard a physical condition that increases the chance of loss (oily rags left near the
furance)
4. Moral Hazard the chance of loss from dishonesty (e.g., a person intentionally causes a loss or
overstates the amount of the loss when a peril occurs)
5. Morale Hazrd inditterence to loss (due to existence of insurance), which creates carelessness and
increases the chance of loss (e.g., failure to lock car doors)
6. Financial Risk exposure to a risk that may cause financial loss
7. Nonfinancial Risk exposure to a risk that does not cause financial loss (e.g., pain and suttering)
8. Static Risk are the losses that are caused by factors other than a change in the
economy, risks that are always present (e.g., natural disaster, earthquake, death,
or flood), they occur regularly and are insurable
9. Dynamic Risk are the result of the economy changing (e.g., changes in business cycle, inflation);
insurance typically does not cover these risks
10. Fundamental risk that can attect many people at once (earthquake, terrorism)
Risk
11. Particular Risk a risk that is individual in nature or attects a small group of people
12. Pure Risk loss of income or asset resulting from the loss of ability to earn income caused by
a disability, death, or sickness
13. Property Risk direct or indirect loss to the property itself from theft or destruction (e.g., fire or
accident)
Answers
1. Peril cause of loss
2. Hazard is a condition that increases the probability a loss will occur
3. Physical Hazard a physical condition that increases the chance of loss (oily rags left near the
furance)
4. Moral Hazard the chance of loss from dishonesty (e.g., a person intentionally causes a loss or
overstates the amount of the loss when a peril occurs)
5. Morale Hazrd inditterence to loss (due to existence of insurance), which creates carelessness and
increases the chance of loss (e.g., failure to lock car doors)
6. Financial Risk exposure to a risk that may cause financial loss
7. Nonfinancial Risk exposure to a risk that does not cause financial loss (e.g., pain and suttering)
8. Static Risk are the losses that are caused by factors other than a change in the
economy, risks that are always present (e.g., natural disaster, earthquake, death,
or flood), they occur regularly and are insurable
9. Dynamic Risk are the result of the economy changing (e.g., changes in business cycle, inflation);
insurance typically does not cover these risks
10. Fundamental risk that can attect many people at once (earthquake, terrorism)
Risk
11. Particular Risk a risk that is individual in nature or attects a small group of people
12. Pure Risk loss of income or asset resulting from the loss of ability to earn income caused by
a disability, death, or sickness
13. Property Risk direct or indirect loss to the property itself from theft or destruction (e.g., fire or
accident)
