CFC Insurance and Risk Management 2

Question 1

A whole life insurance policy's cash value can be accessed through all of the following EXCEPT:

Accepted Answer

Paid-up additions

Answer

Paid-up additions are optional riders that use dividends to purchase additional coverage, not a method to access existing cash value.

Question 2

Which Medicare supplement (Medigap) plan is the most comprehensive, covering nearly all cost-sharing gaps in original Medicare?

Accepted Answer

Plan F (for those eligible before 2020)

Answer

Medigap Plan F covered virtually all Medicare cost-sharing including deductibles and coinsurance, though it is no longer available to newly eligible Medicare beneficiaries as of 2020.

Question 3

In property insurance, 'replacement cost value' (RCV) coverage differs from 'actual cash value' (ACV) in that RCV:

Accepted Answer

Pays the cost to replace property with new equivalent without depreciation deduction

Answer

RCV pays the full cost to replace damaged property with new comparable property, while ACV deducts depreciation from the replacement cost.

Question 4

A 'key person' life insurance policy is owned and paid for by:

Accepted Answer

The business

Answer

Key person insurance is purchased by and payable to the business to offset financial losses caused by the death or disability of an essential employee.

Question 5

When does a split-dollar life insurance arrangement typically work best for a closely held business?

Accepted Answer

When the employer wants to provide tax-advantaged permanent life insurance benefits to select executives

Answer

Split-dollar arrangements allow a company to fund permanent life insurance for key executives on a cost-sharing basis, offering a tax-efficient executive benefit.

CFC - Certified Financial Consultant Practice Test

CFC - Certified Financial Consultant Practice Test

CFC Insurance and Risk Management 2