CFP Ultimate Certified Financial Planner 4

Question 1

Which of the following insurance arrangements allows a business to purchase life insurance on a key employee, with the employee's family receiving a portion of the death benefit and the business recovering its premium costs?

Accepted Answer

Split-dollar life insurance

Answer

Split-dollar life insurance is an arrangement where the employer and employee share the costs and benefits of a life insurance policy, with the employer typically recovering premiums from the death benefit or cash value.

Question 2

A client is considering contributing to a Health Savings Account (HSA). Which requirement must be met to be eligible?

Accepted Answer

The client must be enrolled in a High Deductible Health Plan (HDHP)

Answer

HSA eligibility requires enrollment in a qualified High Deductible Health Plan (HDHP); individuals can have other permitted coverage like dental or vision without losing eligibility.

Question 3

A CFP professional discovers that a client's elderly parent has been the victim of financial exploitation by another family member. What is the CFP professional's PRIMARY ethical obligation?

Accepted Answer

Discuss the situation with the client and consider reporting to appropriate authorities

Answer

The CFP professional should first discuss the situation with the client and may be required to report suspected elder financial abuse to appropriate authorities depending on state law and the circumstances.

Question 4

Which of the following best describes the 'floor-and-upside' retirement income strategy?

Accepted Answer

Using guaranteed income sources to cover essential expenses while investing remaining assets for growth

Answer

The floor-and-upside strategy establishes a guaranteed income floor (Social Security, pensions, annuities) to cover essential needs, then invests additional assets for discretionary spending and legacy goals.

Question 5

A client owns a rental property with an adjusted basis of $80,000 and sells it for $350,000. They have taken $45,000 of depreciation deductions. What portion of the gain is subject to the 25% unrecaptured Section 1250 gain rate?

Accepted Answer

$45,000

Answer

Unrecaptured Section 1250 gain equals the total depreciation taken ($45,000), which is taxed at a maximum rate of 25%; the remaining capital gain is taxed at standard long-term capital gains rates.

CFP - Certified Financial Planner Practice Test

CFP - Certified Financial Planner Practice Test

CFP Ultimate Certified Financial Planner 4