CFP® Practice Question

Which of the following individuals currently covered by Medicare Part A will not have any of their expenses covered by Medicare Part A? Evan – who spent one week in hospice care before losing his battle with cancer. Felicia – who was treated by her doctor for strep throat Greg – who needed a walker…

Frank carries an H0-3 policy with $400,000 of coverage and a $1,000 deductible. It would cost $600,000 to rebuild Frank’s house. How much will his insurance company pay on a $100,000 claim related to a fire that started in Frank’s kitchen? $79,000 $82,333 $83,333 $99,000 CLICK TO REVEAL ANSWER Expand B is the answer. Frank…

Nancy recently received $250,000 from her mother’s life insurance policy. She wants to use a portion of the money to fund her son’s college education that currently costs $10,000 a year and she anticipates an 8% yearly increase. Nancy can earn 7% on her investments and the overall inflation rate is 3%. Nancy’s son will…

Which of the following individuals would typically qualify for accelerated death benefits under their term life insurance policy? Ida, who is expected to die within 7 months from cancer Jacob, who is expected to die within 10 months from AIDS Kay, who is expected to die within 3 months from kidney failure All of the…

A client received an annual salary from his employment of $40,000. He was a 50% owner of both a C Corporation and an S Corporation. The C Corporation had net profits of $20,000 and the S Corporation had income of $10,000. Neither corporation made a distribution. The client’s revocable trust had income of $5,000 but…

Terry received a notice from the IRS correcting a math error on his individual income tax return. As a result, Terry owes $1,000 in taxes, penalties and interest. Which of the following is the most likely penalty or interest assessed against Terry? Understatement penalty Failure to file penalty Fraud penalty Underpayment penalty CLICK TO REVEAL…

Olivia is a 25-year-old single mother with twin girls who just turned three. Olivia has worked for the last 5 years as an administrative assistant for a local law firm. Olivia’s firm provides her with a basic medical insurance policy and a split definition disability. Which of the following is the biggest risk exposure for…

Which of the following statements concerning insurance contracts is not correct? An insurance contract is bilateral because both the insurer and the insured make legally enforceable promises. In an insurance contract, the insurer has made legally enforceable promises for which it can be sued for breach of contract. Because property insurance contracts are personal, it…

Which of the following is a monetary policy that will tighten the money supply? Sell government securities Lower the discount rate Decrease government spending Increase taxes CLICK TO REVEAL ANSWER Expand A is the answer. Selling government securities is a monetary policy that will tighten the money supply as the cash used to purchase the…

Chuck lost his job last year when his company moved their factory overseas. Chuck has been unable to find another job and had to file for a Chapter 7 bankruptcy. Which of the following debts can be discharged in the bankruptcy? $10,000 of rent he owes his landlord $20,000 of taxes he owes the IRS…