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!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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Which type of insurance coverage is designed to offset lost income due to a disability?

Life insurance
Disability income insurance
Health insurance
Property insurance

The correct answer is: Disability income insurance

Disability income insurance is specifically designed to provide financial support in the event that an individual is unable to work due to a disability. This type of insurance typically pays a portion of the insured's income, helping to cover living expenses and maintain financial stability during a period of incapacitation. By doing so, it serves to replace lost wages and provide a safety net for individuals who may be facing extended time away from work due to illness or injury. Life insurance, on the other hand, is intended to provide a financial benefit to beneficiaries upon the death of the insured, and does not address income loss during a disability. Health insurance covers medical expenses and may assist with the costs related to treatment, but does not provide direct compensation for lost income. Property insurance protects against loss or damage to physical assets and similarly does not relate to income replacement in the event of a disability. Thus, disability income insurance is the most appropriate coverage type for offsetting lost income due to a disability.