Certified Financial Consultant (CFC) Practice Exam

In the context of insurance, peril refers to a specific risk or event that can cause loss or damage to an insured property or individual. Fire is considered a peril because it is a recognized risk that can lead to destruction of property, injury, or other types of losses. Insurers typically cover specific perils in their policies, which indicates that if an event like fire occurs, the insurance will respond according to the terms of the policy. The other terms mentioned relate to different aspects of insurance. Coverage refers to the extent to which losses are protected under an insurance policy, outlining what is included and excluded. A deductible is the amount that an insured has to pay out of pocket before the insurance coverage kicks in, which is not a peril but rather a financial term associated with policyholder's expenses. Lastly, a premium is the amount paid by the insured for coverage, representing the cost of the insurance policy itself. These terms do not represent risks or events like fire, but rather the mechanisms and financial components of insurance policies.