FICEP EXAM UPDATED ACTUAL
Questions and CORRECT Answers
Select the statement that correctly describes a progressive tax. - CORRECT ANSWER -A
progressive tax requires people to pay more as they earn more.
What is the name of the organization that offers free tax assistance to taxpayers age 60 or older,
those with disabilities or special needs, or who qualify for earned income or homestead tax
credits? - CORRECT ANSWER - Tax Counseling for the Elderly (TCE)
What percent of tax payers are eligible to use the "Free File Online" service offered as a
partnership between the IRS and tax software companies? - CORRECT ANSWER - 70%
are eligible
When members use tax refunds to pay down debts, which debts should be paid first? -
CORRECT ANSWER - Always pay the debts with high interest rates or that could prompt
garnishments.
Which type of qualified IRA withdrawal is exempt from income tax? - CORRECT
ANSWER - Roth IRA withdrawals are exempt.
Which group of taxpayers usually qualifies for the Earned Income Tax Credit (EITC)? -
CORRECT ANSWER - Low-income families with earned income qualify for the credit.
These six expenses are typically accepted by the IRS as itemized deductions: - CORRECT
ANSWER - Traditional IRA contributions, alimony payments, real estate taxes paid, state
and local income taxes, mortgage interest, and casualty and theft losses.
What is the meaning of the insurance practice "pooling of risks"? - CORRECT
ANSWER - Combining risks among insurers as well as groups of individuals.
, How did the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 impact
employee health benefits? - CORRECT ANSWER - It gave employees the right to retain
health insurance after their job ends by paying the full premium.
Under standard property insurance plans, how much of the cost of replacing property is typically
covered? - CORRECT ANSWER - 80%
Which statement best defines comprehensive and collision insurance coverage for vehicles? -
CORRECT ANSWER - Collision is for accidents and comprehensive is for other forms of
damage and theft.
What type of protection is provided by an umbrella liability policy? - CORRECT
ANSWER - It protects homeowners and vehicle owners from lawsuits.
Which statement accurately describes features of term insurance and whole life insurance? -
CORRECT ANSWER - Whole life policies build cash value and policy settlement options.
Why should a member never simply drop a whole life insurance policy? - CORRECT
ANSWER - Whole life policies usually have cash value, or surrender options.
What is the "rule of 72" used to determine? - CORRECT ANSWER - The number of years
required to double the investment: 72 divided by the current interest rate.
What is the rate of return? - CORRECT ANSWER - The percentage gain in value on your
investment.
If you drop your thermostat by one degree, how much will it cut your heating costs? -
CORRECT ANSWER - 3%
In order to make a cost-effective car purchase, what should you consider before buying? -
CORRECT ANSWER - You should consider the car's cost to buy, cost to maintain, ability
to meet your needs, and resale value.
Questions and CORRECT Answers
Select the statement that correctly describes a progressive tax. - CORRECT ANSWER -A
progressive tax requires people to pay more as they earn more.
What is the name of the organization that offers free tax assistance to taxpayers age 60 or older,
those with disabilities or special needs, or who qualify for earned income or homestead tax
credits? - CORRECT ANSWER - Tax Counseling for the Elderly (TCE)
What percent of tax payers are eligible to use the "Free File Online" service offered as a
partnership between the IRS and tax software companies? - CORRECT ANSWER - 70%
are eligible
When members use tax refunds to pay down debts, which debts should be paid first? -
CORRECT ANSWER - Always pay the debts with high interest rates or that could prompt
garnishments.
Which type of qualified IRA withdrawal is exempt from income tax? - CORRECT
ANSWER - Roth IRA withdrawals are exempt.
Which group of taxpayers usually qualifies for the Earned Income Tax Credit (EITC)? -
CORRECT ANSWER - Low-income families with earned income qualify for the credit.
These six expenses are typically accepted by the IRS as itemized deductions: - CORRECT
ANSWER - Traditional IRA contributions, alimony payments, real estate taxes paid, state
and local income taxes, mortgage interest, and casualty and theft losses.
What is the meaning of the insurance practice "pooling of risks"? - CORRECT
ANSWER - Combining risks among insurers as well as groups of individuals.
, How did the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 impact
employee health benefits? - CORRECT ANSWER - It gave employees the right to retain
health insurance after their job ends by paying the full premium.
Under standard property insurance plans, how much of the cost of replacing property is typically
covered? - CORRECT ANSWER - 80%
Which statement best defines comprehensive and collision insurance coverage for vehicles? -
CORRECT ANSWER - Collision is for accidents and comprehensive is for other forms of
damage and theft.
What type of protection is provided by an umbrella liability policy? - CORRECT
ANSWER - It protects homeowners and vehicle owners from lawsuits.
Which statement accurately describes features of term insurance and whole life insurance? -
CORRECT ANSWER - Whole life policies build cash value and policy settlement options.
Why should a member never simply drop a whole life insurance policy? - CORRECT
ANSWER - Whole life policies usually have cash value, or surrender options.
What is the "rule of 72" used to determine? - CORRECT ANSWER - The number of years
required to double the investment: 72 divided by the current interest rate.
What is the rate of return? - CORRECT ANSWER - The percentage gain in value on your
investment.
If you drop your thermostat by one degree, how much will it cut your heating costs? -
CORRECT ANSWER - 3%
In order to make a cost-effective car purchase, what should you consider before buying? -
CORRECT ANSWER - You should consider the car's cost to buy, cost to maintain, ability
to meet your needs, and resale value.
