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Financial Needs Analysis Flashcards

7 cards from real AFIP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Needs Analysis flashcards as text

  1. A customer has a $250,000 mortgage, $50,000 in consumer debt, and no life insurance. Which financial need should an F&I professional address first?

    Answer: Debt cancellation or credit life coverage

    Debt cancellation or credit life coverage directly addresses the customer's outstanding liabilities and protects their estate from debt burden.

  2. When conducting a financial needs analysis, what is the primary purpose of gathering a customer's monthly income information?

    Answer: To assess their ability to afford protection products and identify coverage gaps

    Monthly income data helps evaluate affordability of protection products and reveals gaps between income and financial obligations.

  3. A single parent with two dependents purchases a vehicle. Which FNA finding would make credit life insurance most critical for this customer?

    Answer: The customer has no spouse or co-borrower to absorb the debt

    Without a co-borrower, the debt falls solely on the estate or dependents, making credit life insurance especially important for single-parent households.

  4. In a financial needs analysis, 'income replacement' refers to:

    Answer: Providing funds to maintain a family's standard of living if the breadwinner dies or becomes disabled

    Income replacement is a core FNA concept ensuring dependents can maintain their lifestyle if the primary earner is no longer able to work.

  5. Which of the following best describes an 'exposure' in the context of financial needs analysis?

    Answer: A financial risk or liability the customer has not yet protected against

    An exposure is an unprotected financial risk identified during the FNA that a suitable product can mitigate.

  6. A customer mentions they are self-employed with no employer-provided disability coverage. Which FNA-identified need does this create?

    Answer: A need for disability income protection

    Self-employed individuals without employer disability benefits have a critical gap in income protection if they become unable to work.

  7. During an FNA, you learn a customer has $2,000 in monthly fixed expenses but only $800 in liquid savings. What financial vulnerability does this reveal?

    Answer: Insufficient emergency reserves to cover expenses during a financial disruption

    Having less than one month of expenses in savings indicates the customer is highly vulnerable to financial disruption from job loss, illness, or unexpected costs.