FICEP FINAL EXAM AND STUDYGUIDE ACTUAL EXAM 400 QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) |ALREADY GRADED A+

FICEP FINAL EXAM AND STUDYGUIDE 2023-2024 ACTUAL

EXAM 400 QUESTIONS AND CORRECT DETAILED ANSWERS

WITH RATIONALES (VERIFIED ANSWERS) |ALREADY

GRADED A+

FICEP FINAL EXAM

Which statement accurately describes features of term insurance and

whole life insurance? - ANSWER- Whole life policies build cash value

and policy settlement options.

Why should a member never simply drop a whole life insurance policy?

- ANSWER- Whole life policies usually have cash value, or surrender

options.

How do riders affect whole life insurance policies? - ANSWER- Riders

offer options to expand or adapt coverage as the member's needs or

circumstances change.

Which of the following riders provides benefits to a member who

becomes disabled? - ANSWER- A premium waiver for disability rider

covers premiums while a member is disabled.

What is the meaning of the phrase "buy term and invest the difference"?

- ANSWER- People should buy a term life policy, compare the cost to a

whole life policy, and then invest the amount they saved.

For people without life insurance, now is usually the best time to buy

because.. - ANSWER- insurance availability declines as people grow

older and their health declines.

How does life insurance improve a family's financial stability? -

ANSWER- It provides funds to support a family after the loss of a key

wage.

What are four things members should have in place before establishing

an investment program? - ANSWER- An emergency fund, adequate

insurance, a savings plan, and a positive credit history.

What is the recommended advice regarding saving and investing? -

ANSWER- Saving should come first, followed by investing.

What are the advantages of having savings? - ANSWER- Savings offer

an insured principal easily accessed for short-term needs.

Why is compound interest so important? - ANSWER- It gives the

member a return on both the original principal and all the interest that

accrues over time.

What is the "rule of 72" used to determine? - ANSWER- The number of

years required to double the investment: 72 divided by the current

interest rate.

What is the rate of return? - ANSWER- The percentage gain in value on

your investment.

What is the definition of dividend? - ANSWER- The portion of a

company's profits paid to stockholders.

Why is a savings account considered a liquid asset? - ANSWER- The

balance can be easily converted to cash.

How do investors define risk? - ANSWER- Risk is the chance that you

will lose the original investment.

What is the rate of return on a 401(k) if your employer matches every $1

you invest with a deposit of 25 cents? - ANSWER- 25%

Select the statement that describes two benefits of investing in mutual

funds. - ANSWER- Mutual funds typically combine diversification with

the ability to invest with relatively small deposits.

Choose the correct ranking of investments based on typical performance

in order of lower risk to higher risk. - ANSWER- Savings account, life

insurance, and mutual funds.

Which investment vehicle has traditionally had the highest rate of

return? - ANSWER- Common stocks over the last 50 years

When the investor's goal is the preserve the principal, what type of

investment vehicle should be selected? - ANSWER- The investor should

select the safest investment options available.

What should the financial counselor consider when making referrals to a

specific investment advisor? - ANSWER- The investment advisor's

compensation, professional designation, and training.

Which of the following statements accurately describes the belief that

"renting is like throwing money away"? - ANSWER- It's a myth.

When is owning a home the best option? - ANSWER- When you are

committed to the area and have a down payment.

How many homeowners nationwide routinely decide not to take the tax

deduction for mortgage interest and property tax because they have

minimal expenses, want to file a basic return, own their home outright,

or fail to qualify for the deduction? - ANSWER- About 1/2 of

homeowners.

Which statement correctly describes a benefit of home ownership? -

ANSWER- Home ownership is a forced savings program that builds

assets through mandatory monthly payments.

How can you reduce the cost of owning or renting a place to live? -

ANSWER- Get a roommate or tenant, either on your own or through a

HomeShare program.