CPCU® 556 Exam Format
The CPCU® 556 exam consists of 85 multiple choice questions broken up into two sections, part A and part B.
- Part A: Concept questions – The first section of the exam will be concept questions; these questions will test your understanding of a definition or topic. The multiple-choice answers will generally provide 2 or 3 partially correct answers and one “best” answer.
- Part B: Case questions – The second section of the exam will be case questions; these questions will require you to apply your knowledge to a specific scenario or event. You will be given a real-life scenario; your job will be to select the best recommendation to solve the given scenario.
CPCU® 556 – Exam Topics
The CPCU® 556 exam focuses primarily on personal financial planning including retirement funding, investing, annuities, life insurance, and health insurance. The CPCU® 556 exam counts towards both the Associate in Personal Insurance designation (API™) and Chartered Property Casualty Underwriter designation (CPCU®).
These questions will test your application of the information by putting you in the shoes of a financial advisor. These questions will give you a real-life scenario; your job will be to select the best recommendation to solve the given scenario. For example, a question may give you a scenario in which a 55-year-old man is planning to retire but would like to use a retirement funding vehicle with little risk and tax free distributions. You will have to choose from the multiple-choice answers to select the best option for this individual. All of the multiple-choice options may be partially correct, such as Roth IRA, 401(k), Traditional IRA, and Mutual fund, but you must choose the best option.
To fully prepare for these types of questions you must completely understand how each retirement funding vehicle operates meaning you should understand the tax treatment, required minimum distributions, contribution limits, age limits, etcetera… Memorize every minor detail. (Yes, the minor details are very important!)
CPCU® 556 – Important Topics
The minor details are important on this exam. Make sure you pay attention to how each financial planning vehicle differentiates from one another. Pay attention to how death benefits are taxed, understand retirement age and how social security benefits change depending on the age of the retiree, and lastly, understand the difference between tax free, tax deferred, and tax-deductible investing.
Below we are outlining some important CPCU® 556 exam topics. We recommend you master these topics before attempting the CPCU® 556 exam. This is our opinion of the topics that are important on your exam.
- Retirement planning – in our opinion, this is one of the most important topics of the CPCU® 556 exam. Make sure you know the difference between the various retirement planning options, know how retirement contributions and distributions are taxed, and know the risks that affect retirement investing.
- Retirement funding (investing) – in our opinion, investing is one of the most important topics of the exam. You must know the various investment vehicles (401K, Roth IRA, etc…), understand employer sponsored plans, know how social security is paid, and know how each investment is taxed.
- Income taxation – in our opinion, taxation is very important. Each financial planning vehicle is tax differently, it is very tricky trying to keep track of all the different taxable vehicles. Be sure to memorize how each aspect of financial planning is taxed, and understand the difference between each type of tax.
Remember, every CPCU® exam is different. No single exam is the same. Be sure to study ALL topics (not just our recommendation). This resource is intended to provide you with a general idea of where your focus should be. Make sure to thoroughly study every topic of this exam.
Two Final Tips:
1) Read the entire online course and focus on the details: Remember to focus on the minor details, especially the taxation of investment vehicles. There are a lot of tricky minor details on this exam, take extra time to write down every financial planning technique in your notes. You must be able to choose the best retirement funding option given a scenario. These questions require that you know all of the minor details and differences between each CPCU® 556 topic so be sure to fully read through the course and memorize all minor details because these questions will try to trick you by changing one little detail!
2) Practice, practice, practice: Practice makes perfect. The only way to prepare for the type of questions you will see on the CPCU® 556 is to take as many practice exams as you possibly can. This will help you familiarize yourself with the CPCU® 556 question format and help you determine which topics you need to re-study.
Free Practice Exam
Ready to get started studying? We’re here to help (for free). Download our free CPCU® 556 practice exams to get a feel for the type of questions you will see on the exam.
For more information about the CPCU® 556 exam, checkout some of our other free resources:
- CPCU® 556 exam questions
- CPCU® 556 exam format
- CPCU® 556 exam difficulty
- CPCU® 556 Video series
- CPCU® Designation Overview
- CPCU® Designation Salary
- CPCU® Cost
- CPCU® Exam Pass Rates
- API™ designation overview
- How to complete the API™ designation
- Continuing education with your API™ designation
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.
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