CPCU® 520 Exam Questions

In this blog, we will break down two example CPCU® 520 exam questions. These questions are taken directly from our CPCU® 520 online course, the questions are designed to mimic the format and feel of the actual exam.

About the CPCU® 520 Exam Questions

The CPCU® 520 exam is a 65-minute virtual exam consisting of 50 multiple-choice questions. Exams are virtual, and non-proctored, meaning you take the exam alone online directly from your computer.

All questions on the virtual exam will be application-based scenario questions. These are tricky questions that require you to apply your knowledge to a real-life scenario to choose the appropriate answer (you will not be repeating a definition or concept). You will be given a real-life scenario; your job will be to select the best recommendation to solve the given scenario.

If you have not previously taken an institute’s administered exam, you will be in for quite the surprise. The questions on these CPCU® exams will be much different than what you may be used to on a typical exam that you took in high school or college. These questions require you to fully understand every aspect of the main topics and require you to actually apply the knowledge, rather than just repeating a definition. I cannot stress this importance enough, the content of the CPCU® 520 exam is not difficult, but the format is tricky. You must fully understand a topic, DO NOT simply memorize definitions and think you will be able to pass.

You can download one of our free practice exams to see what these questions look like.

Time constraint

Remember, the CPCU® 520  exam consists of 50 multiple-choice questions and you only have 65 minutes to complete the exam. That means, you only have about 1 minute and 18 seconds per exam question. That’s not a lot of time. You need to memorize all of the content of this exam to be able to quickly read, analyze, and correctly answer each scenario-based question.

CPCU® 520 Sample Exam Questions (First Sample Question)

Which of the following is true in regard to the brokerage marketing system?

  1. Middle markets often use brokers.
  2. Brokers own the agency expiration list.
  3. A broker represents multiple insurers.
  4. The broker binds policies for the customer.

 

Answer: A – Middle markets often use brokers.

As you can see, a concept question will not ask for you to define anything (as is common in a college exam), it will instead ask you a question in regard to a definition. This means you must fully understand the definition, fully understand all minor details about the definition, and fully understand how this definition is applied. In this case, you must know “what is a broker” and “who uses brokers”.

The answer is A in this case.

A broker is an independent firm that works for the insurance customer. Unlike insurance agents, the broker represents the insurance customer to help find the best insurance. Brokers shop multiple different insurers to find the best insurance coverage for one insured.

  • Brokers do not have the ability to bind insurance coverage. The insurer and insurance agent are ultimately responsible for binding the insurance policy.
  • Middle-market businesses and national accounts typically use brokers to purchase insurance.
  • Both brokers and agents are compensated by commission per policy. They are also compensated through profit-sharing plans based on the volume and loss ratio of the insured policies.
  • The broker does not have an agent expiration list. The agency expiration list is used by independent agents, not brokers.

In a typical exam, such as a college exam, you might expect this question to ask “What is a broker?” The CPCU® exams will rarely format a question in this manner. You should always expect the questions and answers to be formatted using real-life scenarios, often providing 2 or 3 partially correct answers and one BEST answer

As mentioned in our blog about the CPCU® 520 difficulty, the hardest part of the CPCU® 520 will be learning the minor details and complexities of each insurance function. Notice in this example the fact that middle markets often use brokers is a minor detail; missing this one little detail would result in choosing the wrong answer.

For more concept questions, check out our CPCU® 520 practice exam.

CPCU® 520 Sample Exam Questions (Second Sample Question)

Big Blocks Company issues 15,000 shares of common at $20 per share. Big Blocks issues the stock with a $0.15 par value and pays a dividend of $0.25 per share. Big Blocks retained earnings prior to issuing the 15,000 shares is $50,000, and its net income is $25,000. Calculate the paid-in capital for Big Blocks Company.

  1. $2,250
  2. $3,750
  3. $71,250
  4. $300,000

 

Answer: D – $300,000

A case question will give you a scenario like the one seen above; you will be required to select the correct answer based on the given scenario. For a scenario question, you must fully understand what is being asked and fully understand how to apply the information you have learned from studying.

In this example, you are given a lot of information, some of which is useful to the scenario and some of which is intended to confuse you. In this case, you must know:

  • What is paid-in capital.
  • How to calculate paid-in capital.
  • What numbers are needed to calculate paid-in capital.

In this case the answer is D.

Paid in capital is the money raised by a company that is issuing stock. This is the amount of capital “paid in” by investors, meaning the amount of money contributed by investors. This does not include any funds generated from ongoing business operations.

Paid in capital = 15,000 shares X $20 per share = $300,000

These questions are tricky and will require a LOT of critical thinking and question analysis. For more case questions, download our free CPCU® 520 practice exam.

Free Practice Exam

Ready to get started studying? We’re here to help (for free). Download our free CPCU® 520 practice exams to get a feel for the type of questions you will see on the exam.

Download: Free Practice Exam (CPCU® | ARM™ | AINS™ | API™)

More Information

For more information about the CPCU® 500 exam, check out some of our other free resources:

Disclaimer

Difficulty rank, importance rank, and the advice provided in this resource are solely the opinion of AssociatePI. This resource is intended to provide you with a general idea of where your focus should be. Each exam administered by The Institutes is different. AssociatePI is not affiliated with The Institutes or involved in the exam writing process. Please be sure to thoroughly study every chapter and every topic of this course.

CPCU® exams are administered by the American Institute for Chartered Property Casualty Underwriters (“The Institutes”). AssociatePI does not administer the actual exams, we are an independent resource of free content, advice, and study material for professional insurance education. This blog is intended for informational purposes only, to inform prospective students of the benefit of the CPCU® designation.

CPCU® and API™ are trademarks of the American Institute for Chartered Property Casualty Underwriters (“The Institutes”). AssociatePI LLC is not affiliated with, associated with, endorsed by or otherwise supported or recognized by The Institutes in any way. AssociatePI LLC is not authorized by The Institutes to offer courses, practice examinations, or any other resources related to the Institutes’ designations or other programs.

For further information, please email contact@associatepi.com.

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