Certified Financial Planner (CFP) Practice Exam · Question
What is the purpose of Critical Illness Insurance?
Critical illness insurance provides a tax-free, lump-sum payment if the insured is diagnosed with one of the covered critical illnesses, helping to cover costs
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Question: What is the purpose of Critical Illness Insurance?
Answer options:
- To replace lost income due to inability to work from an accident or illness. ✅ To provide a lump-sum payment upon diagnosis of a serious, life-altering illness.
- To cover medical expenses not paid by provincial health plans.
- To pay out a death benefit to beneficiaries.
Correct answer: To provide a lump-sum payment upon diagnosis of a serious, life-altering illness.
Explanation: Critical illness insurance provides a tax-free, lump-sum payment if the insured is diagnosed with one of the covered critical illnesses, helping to cover costs or replace income during recovery.
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