California Life Insurance Exam
Questions and Answers 100%
PASS
Insurers—ANSWER-(Insurance companies or Carriers) manufacture and sell insurance
coverage by way of insurance policies or contracts. In California, any person capable of
making a contract may be an insurer, subject to the restrictions imposed by the insurance
code. In this case, a person is defined as any individual (natural person), association,
organization, partnership, business trust, limited liability company, or corporation.
Insurance Agencies—ANSWER-are independent organizations that recruit, contract with,
and support sales agents and producers.
Insurance Agents—ANSWER-are licensed individuals authorized, by and on behalf of an
insurer, to transact insurance through an admitted insurance company.
An Insured—ANSWER-is the person or entity that buys insurance for protection from loss of
life or disability.
Stock Insurance Company—ANSWER-A stock company is owned by stockholders or
shareholders. Directors and officers are elected by stockholders and carry out the company's
mission. Stockholders may receive taxable corporate dividends as a share of the company's
, profit when and if declared by the Directors. Traditionally, stock insurers issue Non-
Participating policies.
Mutual Insurance Company—ANSWER-Owned by policyholders/members. A Board of
Trustees or Directors elected by policyholders to manage company. Policyholders may
receive non-taxable dividends as a return of any divisible surplus when and if declared by
the directors. Traditionally, mutual insurers issue Participating policies. Most mutual
companies are non-assessable, meaning they cannot charge members a pro rata share of
loss and expense at the end of the policy period.
Fraternal Benefit Societies—ANSWER-Fraternal societies are primarily social organizations
that engage in charitable and benevolent activities that provide insurance (primarily life
insurance) to their members. They are usually organized on a nonprofit basis. Membership is
typically drawn from members of a given lodge, order, or society.
Reinsurance Companies—ANSWER-Device used by insurers to transfer or share in a risk with
a third party. Limits loss an insurer will face if a very large claim becomes payable. At least
two insurers involved:
The primary insurer originating the application (ceding company)
The insurer who shares in the risk (reinsurance insurer)
Domestic Insurer—ANSWER-An insurer organized under the laws of California, whether or
not it is admitted to do business in this state.
Foreign Insurer—ANSWER-Insurer not organized under the laws of California, but in one of
the other states or jurisdictions within the United States.
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
Questions and Answers 100%
PASS
Insurers—ANSWER-(Insurance companies or Carriers) manufacture and sell insurance
coverage by way of insurance policies or contracts. In California, any person capable of
making a contract may be an insurer, subject to the restrictions imposed by the insurance
code. In this case, a person is defined as any individual (natural person), association,
organization, partnership, business trust, limited liability company, or corporation.
Insurance Agencies—ANSWER-are independent organizations that recruit, contract with,
and support sales agents and producers.
Insurance Agents—ANSWER-are licensed individuals authorized, by and on behalf of an
insurer, to transact insurance through an admitted insurance company.
An Insured—ANSWER-is the person or entity that buys insurance for protection from loss of
life or disability.
Stock Insurance Company—ANSWER-A stock company is owned by stockholders or
shareholders. Directors and officers are elected by stockholders and carry out the company's
mission. Stockholders may receive taxable corporate dividends as a share of the company's
, profit when and if declared by the Directors. Traditionally, stock insurers issue Non-
Participating policies.
Mutual Insurance Company—ANSWER-Owned by policyholders/members. A Board of
Trustees or Directors elected by policyholders to manage company. Policyholders may
receive non-taxable dividends as a return of any divisible surplus when and if declared by
the directors. Traditionally, mutual insurers issue Participating policies. Most mutual
companies are non-assessable, meaning they cannot charge members a pro rata share of
loss and expense at the end of the policy period.
Fraternal Benefit Societies—ANSWER-Fraternal societies are primarily social organizations
that engage in charitable and benevolent activities that provide insurance (primarily life
insurance) to their members. They are usually organized on a nonprofit basis. Membership is
typically drawn from members of a given lodge, order, or society.
Reinsurance Companies—ANSWER-Device used by insurers to transfer or share in a risk with
a third party. Limits loss an insurer will face if a very large claim becomes payable. At least
two insurers involved:
The primary insurer originating the application (ceding company)
The insurer who shares in the risk (reinsurance insurer)
Domestic Insurer—ANSWER-An insurer organized under the laws of California, whether or
not it is admitted to do business in this state.
Foreign Insurer—ANSWER-Insurer not organized under the laws of California, but in one of
the other states or jurisdictions within the United States.
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
