PSI CA Life, Accident, and Health License Exam 2025/2026

As a life insurance agent, you know that when courts evaluate a contract to determine the parties' intentions, they take into account specific documents. Which documents are considered in this process?

Entire contract and application

According to the California Insurance Code, what is "insurance"?

A contract

In a life insurance contract, what term describes the combined policy and application as a comprehensive agreement between the policyowner and the insurer?

Entire Contract Provison

Which whole life policy premium type is the most common?

continuous premium

All life insurance and health insurance contracts contain all of the following EXCEPT

Representations

An insurer that has been found using higher rates based on race,religion, or ethnicity is said to be engaging in

unfair discrimination

The California Insurance Code defines "policy" as a(n)

written contract

what is the definition of premium?

Money an insured pays an insurer to obtain the benefits provided in the policy.

What is the primary source of information used by insurers to assess risk and determine premiums in life, accident, and health insurance?

Application

How does an "admitted" person differ from an "nonadmitted" person, as it pertains to insurance?

An "admitted" person has the right to transact insurance business within the state, while a "nonadmitted" person is not entitled to this action.

As a broker, you are assisting your client in finding appropriate insurance coverage. In order to ensure that the company offering the insurance is authorized to do so in their state, you should look for a(an)

admitted insurer.

An insurer entitled to transact business by complying with the California Insurance Code is known as a:

admitted insurer.

A Canadian insurer that benefits shareholders and is approved to operate in a U.S. state would be classified as which type of insurer?

Admitted Alien Stock Company

Which is the difference between participating and non-participating policies?

Participating policies pay dividends while non-participating policies do not.

John owns an insurance company that gives him the right to share and then share surplus. What kind of policy is this?

Participating

When a mutual insurer becomes a stock company, the process is called

Demutualization

A person who asserts a right of recovery under an insurance policy is called a

claimant

In California, an insurer organized under the state laws of Oregon is called a(n)

foreign insurer

Under the California Insurance Code, a licensee's license number must be printed at what size on all price quotes, business cards, and printed material?

The same size print as the licensee's phone number, fax number or address

As an insurance agent, you are convicted of a crime involving dishonesty or breach of trust. To continue working in the industry, you must obtain written consent from an insurance regulatory official according to which federal law?

18 USC Sections 1033 and 1034

According to the California insurance code, the commissioner can disapprove a licensee's request to use a fictitious name for any of the following reasons EXCEPT that the

name is the licensee's actual name

All of the following are requirements of contract EXCEPT

there must be equal consideration between the parties

If an insurer must have its rates accepted by the insurance Department prior to using them, the insurer would be operating in which of the following types of jurisdictions?

prior approval

it is federal offense for an insurance agent to do all of the following EXCEPT

misrepresent facts on an insurance application

How often MUST an insurer file the National Association of Insurance Commissioners (NAIC) financial statement?

annually

According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwilfully commits an unfair method of competition?

$5,000

Section 1729.2 of the California Insurance Code requires insurance producer applications and licensees to notify the Insurance Commissioner in writing, within ___days of charges in background information after an application has been submitted or a license has been issued.

30

How long must life agents keep the transaction records?

5 years

What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer?

Notice of appointment must be submitted to the Commissioner

Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance

solicitor

The California insurance code has authorized standards for names used by life insurance agents. Which of the following, if any, are automatically acceptable for Lance Manyon, a holder of the CLU designation?

Lance Manyon, CLU

As authorized by the California Insurance Code, the Insurance Commissioner has provided standards for names used by life insurance agents. Under these standards which, if any, of the following are automatically acceptable for Mary Brown, a holder of the CLU designation?

Mary Brown, CLU Insurance services

according to the California insurance code, if an insurer's certificate of authority is revoked, the Commissioner can proceed with any of the following EXCEPT

using Guarantee Funds to pay salaries

Pete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of?

Fiduciary misappropriation

According to the California Insurance Code, how is the word "may" interpreted?

permissive

Which of the following does the California Insurance Code NOT require an insurance policy to specify?

insurer's financial rating

What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code?

Presentation of policy features that includes non-guaranteed elements

The California Life and Health Insurance Guarantee Association covers all of these types of policies EXCEPT

Self-funded plans

An agent has advertised that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association. This agent has committed a(n)

unfair method of competition

Which of the following acts is NOT a Federal offense committed by an insurance agent?

Misrepresentation on an insurance application

All of the following are classifications of risk EXCEPT

non-nicotine

An agent's attempt to stop the replacement of an existing life insurance policy is known as

conservation

An agent who is acting as an insurance agent, broker, solicitor, life agent, accident and health, or bail agent acts in which capacity when handling premiums or return premiums for an insured?

fiduciary

if you have been convicted of a misdemeanor and that misdemeanor conviction is later expunged pursuant to California Penal Code Section 1203.4, which of the following is true

event though your misdemeanor conviction was expunge, you must still disclose conviction on your individual application for an insurance license

What would a person be guilty of who refuses to deliver any books, records, or assets to the commissioner once a seizure order has been executed?

a misdemeanor

which of the following would an agent be guilty of for misrepresenting the amount of dividends a policy will pay?

a misdemenor

the direct response distribution of insurance utilizes all of the following to promote the sales of insurance EXCEPT

telephone call from the agent

Failure to report background changes within 30 days as required under section 1729.2 of the California insurance code could subject a license or applicant to

all of these

According to the California Insurance Code, what term is used to describe a fact so important it could affect the policy premium?

Materiality

Insurer policy expenses include all of the following EXCEPT

premiums

when are parties to a contract REQUIRED to communicate information solely based on personal judgement for a matter in question

never

which of the follows is a hazard?

a condition that may increase the likelihood of a loss ocuring

Which is an agreement in which an insurer contracts with a third party to insure itself against losses from insurance policies it issues

reinsurance

what is the goal of the underwriting process

to avoid selecting a disproportionate number of bad risks

the process by which am insurer decided whether to issue requested insurance is called

underwriting

An insured replaces an existing annuity with a new one and must pay a surrender charge for cancelling the What do we call the process whereby insurers decide which customers to insure and what coverage to offer ?

Underwriting

As a life insurance agent, your main responsibility is to assist clients with the process of:

Transferring Risk

An insurer owned by its policyholders, is called a

Mutual insurer

An insurer enter into a contract with a third-party to ensure itself against losses from insurance policies it issues. What is this agreement called?

Reinsurance

What is a participating life insurance policy?

Policyowners are entitled to receive dividends

A participating company is also referred to as which type of insurer?

Mutual insurer

The purchase of an insurance policy may accomplish all of the following for the insured EXCEPT

Eliminating risk

According to the California insurance code, an insurance policy must specify all of the following EXCEPT

financial rating of the insurer

Loss retention is an effective risk management technique when all of the following conditions exist EXCEPT the

probability of loss is unknown

Who are members of the Medical Information Bureau?

Life and health insurers (life and health insurance companies)

What is a MIB report?

medical information on an applicant for assessing life or health insurance risk

Unless it is merely a statement of an expectation or a belief, a representation as to the future is considered which of the following?

promise

Upon notification of a claim, a claimant must be given access to the California Fair Claims Settlement Practices resolution by all of the following means EXCEPT

by interview appointment with the agent of record

what rule is used to determine the importance of a representation?

the materiality of concealment

In accident and health insurance, what term represents the direct cause of an accidental injury?

peril

all of the following are benefits of insurance EXCEPT it

eliminates fraudulent losses

All of the following qualify as "background information" as defined in Section 1729.2 of the California Insurance Code, EXCEPT

misdemeanor charges filed, not resulting in conviction

An insurer enters into a contract with a third party to insure itself against losses from insurance policies it issues. What is this agreement called?

Reinsurance

Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event?

Insurance policy

Which of the following is Not a characteristic of reinsurance?

Increases the unearned premium reserved

Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposures?

Captive insurer

Which of the following is not considered to be a definition for the term "loss"?

Probability that an event will occur

Which of the following is not considered a definition of a risk?

The cause of loss

Which of the following is NOT a benefit of insurance?

Losses due to fraud are eliminated

Which of the following is any situation that presents the possibility of a loss?

Risk

Which of the following would not be accomplished with the purchase of an insurance policy?

Risk is eliminated

which of the following statement regarding risk is TRUE

only pure risks are insurable

Which of the following is a situation where there is a possibility of either a loss or gain?

Speculative risk

Which of these statements correctly describes risks?

Pure risk is the only insurable risk

Which of the following best describes the statement; " the more times, and event is repeated, the more predictable the outcome becomes"?

The Law of Large Numbers

Why is having a large number of similar exposure units important to insurers?

The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums

An insurer having a large number of similar exposure units is considered important because:

The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums.

Which type of risk is gambling?

Speculative risk

Moral hazard is described as the:

increased chance of a loss because of an insured's dishonest tendencies

All of the following circumstances must be met for loss retention to be an effective risk management technique, EXCEPT:

Probability of loss is unknown.

All of the following circumstances must be met for los retention to be an effective, risk management technique, except

Probability of loss is unknown

If an insured dies because of an accident, which type of life insurance rider will provide additional coverage?

Accidental death rider

How is a life insurance policy dividend legally defined?

A return of excess premium and non-taxable

An insurer can be protected from adverse selection by which policy provision?

Suicide clause

What does the guaranteed insurability option allow and insured to do?

Purchase additional coverage with no evidence of insurability required

How are acts of war and aviation treated under a group life insurance policy?

Generally excluded from coverage.

Which of these is not a valid policy dividend option?

Monthly income payments

What is a common reason people purchase an annuity? To protect against the risk of outliving their financial resources

To protect against outliving financial resources

A savings vehicle designed to first accumulate funds and then systematically liquidates the funds is called a(n)

Deferred annuity

The systematic liquidation of a sum of money is provided by

annuity