Certified Financial Consultant (CFC) Practice Exam

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Prepare for the Certified Financial Consultant Exam. Enhance your understanding with detailed questions, hints, and explanations. Boost your confidence for the CFC test!

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Which of the following is a statement that is guaranteed to be true, and if untrue may breach an insurance contract?

Representation
Acknowledgment
Warranty
Disclosure

The correct answer is: Warranty

A warranty is a statement that must be guaranteed to be true within the context of an insurance contract. Unlike representations, which refer to statements made to the best of one's knowledge, a warranty is an assurance that certain facts are true and must be met for the insurance contract to remain valid. If a warranty is found to be untrue, it can lead to a breach of the contract, allowing the insurer to deny coverage or void the policy entirely. In contrast, a representation is generally regarded as a belief or opinion that an applicant provides when obtaining insurance, and while it should be accurate, it does not carry the same strict liability as a warranty. Acknowledgment refers to the recognition of facts without the promise of their accuracy, and disclosure is the act of revealing relevant information. These concepts may influence the validity of an insurance contract, but they do not impose the same level of obligation as a warranty does.