CPCU 556 Practice Questions With Correct
Answers Latest Upload
Tom and Annie have been married for two years, and are considering starting a family. They have
decided that they should develop a financial plan. The first step in the personal financial planning
process is
Select one:
A. Establishing and prioritizing financial goals.
B. Developing a plan.
C. Analyzing the current situation.
D. Gathering information. - ANSWER ✔ - A. Establishing and prioritizing financial goals.
Which one of the following statements about unemployment insurance is true?
Select one:
A. It is financed solely be FICA taxes paid by employed persons.
B. Benefits are limited and vary from state to state.
C. Its major drawback is that only slightly more than half the states have such programs.
D. Benefits typically last for up to six years. - ANSWER ✔ - B. Benefits are limited and vary from state to
state.
Eric and Elizabeth are retirees who have been providing some financial support to Elizabeth's disabled
sister. They want to continue this support if they predecease the sister. However, they are concerned
that she might lose access to government programs if they directly give her assets. Which one of the
following is a method of meeting their objective?
Select one:
A. Request that their children be appointed her legal guardians.
B. Transfer property to a trust.
C. Leave her assets in their wills.
D. Make sure she immediately applies for all potential government benefits. - ANSWER ✔ - B. Transfer
property to a trust.
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,Personal financial planning must include Social Security, which includes income benefits to older
persons. Recipients are not able to receive their full monthly benefit until they reach full retirement age.
By 2027, the full retirement age will be
Select one:
A. Sixty-seven.
B. Sixty-eight.
C. Sixty-nine.
D. Seventy. - ANSWER ✔ - A. Sixty-seven.
Bruce and Sue are trying to decide how much additional life insurance is needed if he should die.
Currently, Sue does not work outside the home.
They have come up with the following needs of Sue and the family as a result of Bruce's death:
NEEDAMOUNT Final expenses$15,000 Debt elimination$340,000 Family living expenses$400,000 Special
needs$25,000 Sue's retirement needs$350,000
Bruce and Sue currently have $10,000 in bank accounts. Bruce has $150,000 of employer provided life
insurance, $300,000 of individually purchased life insurance, and a $50,000 death benefit in a pension
plan. Sue is the beneficiary of all of these. The estimated Social Security survivors benefits upon Bruce's
death are $230,000.
Using the needs approach, how much additional life insurance should Bruce purchase?
Select one:
A. $40,000
B. $200,000
C. $390,000
D. $400,000 - ANSWER ✔ - C. $390,000
Which one of the following statements is correct regarding how the single premium for a substandard
life annuity tends to compare to the premium for an otherwise identical standard life annuity?
Select one:
A. The premium for the substandard life annuity is the same.
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CPCU 556
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, B. The premium for the substandard life annuity is slightly greater
C. The premium for the substandard life annuity is less.
D. The premium for the substandard life annuity is significantly greater. - ANSWER ✔ - C. The premium
for the substandard life annuity is less.
Paula is a successful business woman. She is married with three grown children. Paula has always been
very grateful for her college experience, and feels that it is responsible for much of her success. She has
made a pledge of $50,000 to the college when she dies. She would like to fund this pledge through a life
insurance policy. Which one of the following types of life insurance policy should she purchase to
guarantee that the separate funds are available to satisfy this pledge?
Select one:
A. Universal life insurance
B. Whole life insurance
C. Term life insurance
D. Variable universal life insurance - ANSWER ✔ - B. Whole life insurance
It provides permanent and level life insurance. The premiums are also fixed. Universal and variable
universal life insurance do not provide a fixed coverage basis or a fixed premium.
Jason recently purchased a term insurance policy that can be renewed at one year intervals for an
increasing premium, even though the death benefit remains constant. This policy is referred to as a
Select one:
A. Yearly renewable term policy.
B. Mortgage protection term policy.
C. Mortality adjustment term policy.
D. Modified premium term policy. - ANSWER ✔ - A. Yearly renewable term policy.
During a deferred annuity's accumulation period, the contract accumulates a cash value. Eventually, this
cash value
Select one:
A. Is eventually liquidated through periodic payments.
B. Becomes the contract's death benefit during the payout period.
C. Is given to the annuitant if his or her or life expectancy is exceeded.
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CPCU 556
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Answers Latest Upload
Tom and Annie have been married for two years, and are considering starting a family. They have
decided that they should develop a financial plan. The first step in the personal financial planning
process is
Select one:
A. Establishing and prioritizing financial goals.
B. Developing a plan.
C. Analyzing the current situation.
D. Gathering information. - ANSWER ✔ - A. Establishing and prioritizing financial goals.
Which one of the following statements about unemployment insurance is true?
Select one:
A. It is financed solely be FICA taxes paid by employed persons.
B. Benefits are limited and vary from state to state.
C. Its major drawback is that only slightly more than half the states have such programs.
D. Benefits typically last for up to six years. - ANSWER ✔ - B. Benefits are limited and vary from state to
state.
Eric and Elizabeth are retirees who have been providing some financial support to Elizabeth's disabled
sister. They want to continue this support if they predecease the sister. However, they are concerned
that she might lose access to government programs if they directly give her assets. Which one of the
following is a method of meeting their objective?
Select one:
A. Request that their children be appointed her legal guardians.
B. Transfer property to a trust.
C. Leave her assets in their wills.
D. Make sure she immediately applies for all potential government benefits. - ANSWER ✔ - B. Transfer
property to a trust.
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CPCU 556
©®
,Personal financial planning must include Social Security, which includes income benefits to older
persons. Recipients are not able to receive their full monthly benefit until they reach full retirement age.
By 2027, the full retirement age will be
Select one:
A. Sixty-seven.
B. Sixty-eight.
C. Sixty-nine.
D. Seventy. - ANSWER ✔ - A. Sixty-seven.
Bruce and Sue are trying to decide how much additional life insurance is needed if he should die.
Currently, Sue does not work outside the home.
They have come up with the following needs of Sue and the family as a result of Bruce's death:
NEEDAMOUNT Final expenses$15,000 Debt elimination$340,000 Family living expenses$400,000 Special
needs$25,000 Sue's retirement needs$350,000
Bruce and Sue currently have $10,000 in bank accounts. Bruce has $150,000 of employer provided life
insurance, $300,000 of individually purchased life insurance, and a $50,000 death benefit in a pension
plan. Sue is the beneficiary of all of these. The estimated Social Security survivors benefits upon Bruce's
death are $230,000.
Using the needs approach, how much additional life insurance should Bruce purchase?
Select one:
A. $40,000
B. $200,000
C. $390,000
D. $400,000 - ANSWER ✔ - C. $390,000
Which one of the following statements is correct regarding how the single premium for a substandard
life annuity tends to compare to the premium for an otherwise identical standard life annuity?
Select one:
A. The premium for the substandard life annuity is the same.
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CPCU 556
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, B. The premium for the substandard life annuity is slightly greater
C. The premium for the substandard life annuity is less.
D. The premium for the substandard life annuity is significantly greater. - ANSWER ✔ - C. The premium
for the substandard life annuity is less.
Paula is a successful business woman. She is married with three grown children. Paula has always been
very grateful for her college experience, and feels that it is responsible for much of her success. She has
made a pledge of $50,000 to the college when she dies. She would like to fund this pledge through a life
insurance policy. Which one of the following types of life insurance policy should she purchase to
guarantee that the separate funds are available to satisfy this pledge?
Select one:
A. Universal life insurance
B. Whole life insurance
C. Term life insurance
D. Variable universal life insurance - ANSWER ✔ - B. Whole life insurance
It provides permanent and level life insurance. The premiums are also fixed. Universal and variable
universal life insurance do not provide a fixed coverage basis or a fixed premium.
Jason recently purchased a term insurance policy that can be renewed at one year intervals for an
increasing premium, even though the death benefit remains constant. This policy is referred to as a
Select one:
A. Yearly renewable term policy.
B. Mortgage protection term policy.
C. Mortality adjustment term policy.
D. Modified premium term policy. - ANSWER ✔ - A. Yearly renewable term policy.
During a deferred annuity's accumulation period, the contract accumulates a cash value. Eventually, this
cash value
Select one:
A. Is eventually liquidated through periodic payments.
B. Becomes the contract's death benefit during the payout period.
C. Is given to the annuitant if his or her or life expectancy is exceeded.
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CPCU 556
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