CA PSI Site - Life, Accident and Health Agent Examination
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(Life Agent) questions with accurate detailed answers
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Admitted Insurance Company vs. Non-Admitted Insurance Company - ✔✔An admitted
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insurance company is authorized to transact insurance in California because it has a
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Certificate of Authority granted by the California Department of Insurance (CDI)
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A non-admitted insurance company is not authorized to transact insurance in California
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because of failing to comply with California requirements or did not seek admission
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Pure Risk vs. Speculative Risk - ✔✔Pure risks are insurable but Speculative risks are not
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Pure Risks - A possibility of loss, no loss, or gain
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Pure Risk - A possibility of loss or no loss; there is no possibility for gain
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Contract of Adhesion - ✔✔One party writes the contract without inout from the other party
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on a "take-it-or-leave-it" basis
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Aleatory Contract - ✔✔The exchange of value is unequal.
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Insured's premium payment is less than the potential benefit to be received in the event of a
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loss.
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Indemnity Contract - ✔✔An agreement to pay on behalf of another party under specified
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circumstances
,Unilateral Contract - ✔✔Only one party is legally bound to the contractual obligations after
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the premium is paid to the insurer
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Only the insurer makes a promise of future performance, and only the insurer can be
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charged with breach of contract || || || ||
4 elements of a valid contract - ✔✔1) Competent Parties
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2) Legal Purpose
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3) Agreement (offer and acceptance)
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4) Consideration
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Preferred Risks vs Standard Risks - ✔✔Standard Risks are individuals who have the same
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health, habits, sex/gender, and occupational characteristics as those reflected in the
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mortality table ||
Preferred Risks are individuals who meet certain requirements and qualify for lower
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premiums because of ideal health, height and weight. Individuals in this category have a
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longer than average life expectancy || || || ||
Human Life Value Approach vs. Needs Analysis Approach - ✔✔Human Life Value
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approach is a measure of the projected future earnings and services of a person at risk in the
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event of a premature death.
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The objective is to provide the proper amount of coverage as determined by the value of the
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individual to his/her dependents using the following factors: || || || || || || ||
- The individual's age and gender
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- The individual's occupation, annual wage, and planned retirement age
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- Inflation
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, Needs Analysis Approach determines a need for coverage upon the premature death of an
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individual. ||
It always assumes the death of the individual to be immediate and factors the following
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steps into arriving at the proper amount of coverage needed:
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- Calculate all financial needs caused by immediate death, including debts, medical bills,
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and final expenses || ||
- Provide lifetime income to the spouse
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- Pay off mortgage or other debts
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- Provide funds for children's education
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- Subtracts any assets available to fund financial needs after death (such as retirement plan,
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other insurance, liquid investments, separate savings)
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Waiver of Premium - ✔✔Life Insurance Disability Rider
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If the insured becomes totally disabled, the insurer will waive premiums for the duration of
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the disability or the end of the policy, whichever occurs first.
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To qualify for the waiver, the insured must be disabled for a waiting period of 3-6 months.
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The policyowner must continue to pay premiums during the waiting period, but once
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eligible, the waiver is retroactive to the start of the disability and the premiums will be
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refunded.
During the disability, the insured will credit the premiums to the policy and all benefits,
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such as cash value accumulation and dividend payments, will continue.
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Disability Income Rider - ✔✔Life Insurance Disability Rider || || || || || || ||
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(Life Agent) questions with accurate detailed answers
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Admitted Insurance Company vs. Non-Admitted Insurance Company - ✔✔An admitted
|| || || || || || || || || ||
insurance company is authorized to transact insurance in California because it has a
|| || || || || || || || || || || || ||
Certificate of Authority granted by the California Department of Insurance (CDI)
|| || || || || || || || || ||
A non-admitted insurance company is not authorized to transact insurance in California
|| || || || || || || || || || || ||
because of failing to comply with California requirements or did not seek admission
|| || || || || || || || || || || ||
Pure Risk vs. Speculative Risk - ✔✔Pure risks are insurable but Speculative risks are not
|| || || || || || || || || || || || || ||
Pure Risks - A possibility of loss, no loss, or gain
|| || || || || || || || || ||
Pure Risk - A possibility of loss or no loss; there is no possibility for gain
|| || || || || || || || || || || || || || ||
Contract of Adhesion - ✔✔One party writes the contract without inout from the other party
|| || || || || || || || || || || || || ||
on a "take-it-or-leave-it" basis
|| || || ||
Aleatory Contract - ✔✔The exchange of value is unequal.
|| || || || || || || ||
Insured's premium payment is less than the potential benefit to be received in the event of a
|| || || || || || || || || || || || || || || ||
loss.
||
Indemnity Contract - ✔✔An agreement to pay on behalf of another party under specified
|| || || || || || || || || || || || || ||
circumstances
,Unilateral Contract - ✔✔Only one party is legally bound to the contractual obligations after
|| || || || || || || || || || || || || ||
the premium is paid to the insurer
|| || || || || ||
Only the insurer makes a promise of future performance, and only the insurer can be
|| || || || || || || || || || || || || || ||
charged with breach of contract || || || ||
4 elements of a valid contract - ✔✔1) Competent Parties
|| || || || || || || || ||
2) Legal Purpose
|| ||
3) Agreement (offer and acceptance)
|| || || ||
4) Consideration
||
Preferred Risks vs Standard Risks - ✔✔Standard Risks are individuals who have the same
|| || || || || || || || || || || || || ||
health, habits, sex/gender, and occupational characteristics as those reflected in the
|| || || || || || || || || || ||
mortality table ||
Preferred Risks are individuals who meet certain requirements and qualify for lower
|| || || || || || || || || || || ||
premiums because of ideal health, height and weight. Individuals in this category have a
|| || || || || || || || || || || || || ||
longer than average life expectancy || || || ||
Human Life Value Approach vs. Needs Analysis Approach - ✔✔Human Life Value
|| || || || || || || || || || || ||
approach is a measure of the projected future earnings and services of a person at risk in the
|| || || || || || || || || || || || || || || || ||
event of a premature death.
|| || || || || ||
The objective is to provide the proper amount of coverage as determined by the value of the
|| || || || || || || || || || || || || || || || ||
individual to his/her dependents using the following factors: || || || || || || ||
- The individual's age and gender
|| || || || ||
- The individual's occupation, annual wage, and planned retirement age
|| || || || || || || || ||
- Inflation
||
, Needs Analysis Approach determines a need for coverage upon the premature death of an
|| || || || || || || || || || || || || ||
individual. ||
It always assumes the death of the individual to be immediate and factors the following
|| || || || || || || || || || || || || || ||
steps into arriving at the proper amount of coverage needed:
|| || || || || || || || ||
- Calculate all financial needs caused by immediate death, including debts, medical bills,
|| || || || || || || || || || || || ||
and final expenses || ||
- Provide lifetime income to the spouse
|| || || || || ||
- Pay off mortgage or other debts
|| || || || || ||
- Provide funds for children's education
|| || || || ||
- Subtracts any assets available to fund financial needs after death (such as retirement plan,
|| || || || || || || || || || || || || || ||
other insurance, liquid investments, separate savings)
|| || || || ||
Waiver of Premium - ✔✔Life Insurance Disability Rider
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If the insured becomes totally disabled, the insurer will waive premiums for the duration of
|| || || || || || || || || || || || || || ||
the disability or the end of the policy, whichever occurs first.
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To qualify for the waiver, the insured must be disabled for a waiting period of 3-6 months.
|| || || || || || || || || || || || || || || ||
The policyowner must continue to pay premiums during the waiting period, but once
|| || || || || || || || || || || || ||
eligible, the waiver is retroactive to the start of the disability and the premiums will be
|| || || || || || || || || || || || || || || ||
refunded.
During the disability, the insured will credit the premiums to the policy and all benefits,
|| || || || || || || || || || || || || || ||
such as cash value accumulation and dividend payments, will continue.
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Disability Income Rider - ✔✔Life Insurance Disability Rider || || || || || || ||
