California Life, Accident, and Health State
EXAM LATEST 2026-2027 200
QUESTIONS AND 100% Verified,,,
Question 1
Which of the following best defines the principle of "indemnity" as it applies to
health insurance?
A) It guarantees a fixed interest rate on cash value.
B) It ensures the insured does not profit from a loss, but is restored to the same
financial position prior to the loss.
C) It allows the insured to assign benefits to a third party.
D) It requires the agent to act in the best interest of the insurer.
Correct ,,,ANSWER,,,: B
Rationale: Indemnity means to "make whole." Health insurance indemnifies the
insured for covered medical expenses, preventing financial gain from a claim,
unlike life insurance which pays a stated benefit regardless of actual loss.
Question 2
Under the California Insurance Code, what is the definition of "Negligence"?
A) The intentional act of causing harm to another person.
B) The failure to use ordinary or reasonable care, resulting in injury to another.
,C) The misrepresentation of policy benefits to an applicant.
D) The failure to pay premiums on the due date.
Correct ,,,ANSWER,,,: B
Rationale: Negligence is a legal concept involving a breach of duty to act with
reasonable care, leading to unintended harm. Intentional acts or misrepresentations
are separate violations.
Question 3
In insurance, "adverse selection" refers to:
A) The tendency of agents to sell policies to high-risk individuals only.
B) The tendency of higher-risk individuals to seek out or retain insurance more
often than lower-risk individuals.
C) The insurer's practice of canceling policies for non-payment.
D) The state's oversight of insurance rating.
Correct ,,,ANSWER,,,: B
Rationale: Adverse selection occurs when there is a lack of symmetry between the
insurer and the applicant. High-risk individuals are more likely to buy insurance,
which can lead to higher claim costs if not properly underwritten.
Question 4
Which type of insurer is owned by its policyholders?
,A) Stock company
B) Reciprocal insurer
C) Surplus lines insurer
D) Mutual company
Correct ,,,ANSWER,,,: D
Rationale: Mutual insurance companies are owned by the policyholders
(members), who may receive dividends. Stock companies are owned by
shareholders.
Question 5
What is the order in which beneficiaries receive proceeds from a life insurance
policy?
A) Primary then contingent
B) Equal distribution to all named
C) Succession of beneficiaries
D) According to the insured's will
Correct ,,,ANSWER,,,: C
Rationale: Beneficiaries receive proceeds in succession - primary beneficiaries
first. If no primary beneficiary survives the insured, contingent beneficiaries
receive the proceeds.
Question 6
, If a company provides group disability insurance to its employees, which of the
following may be tax-deductible?
A) The premiums paid by the employee as a personal expense
B) The premiums paid by the company as a business expense
C) Only the disability benefits received
D) Neither premiums nor benefits
Correct ,,,ANSWER,,,: B
Rationale: Employers may deduct group disability insurance premiums paid on
behalf of employees as a business expense. Employees may also deduct premiums
under certain circumstances, but the employer deduction is standard.
Question 7
Which annuity settlement option provides a stated monthly amount to the annuitant
and upon the annuitant's death the same or a lesser amount paid for the lifetime of
the survivor?
A) Life annuity with period certain
B) Joint and survivorship option
C) Installment refund option
D) Cash refund option
Correct ,,,ANSWER,,,: B
Rationale: The Joint and Survivorship option provides payments for two or more
annuitants. Upon the first death, the survivor continues receiving payments, often
at a reduced amount.
EXAM LATEST 2026-2027 200
QUESTIONS AND 100% Verified,,,
Question 1
Which of the following best defines the principle of "indemnity" as it applies to
health insurance?
A) It guarantees a fixed interest rate on cash value.
B) It ensures the insured does not profit from a loss, but is restored to the same
financial position prior to the loss.
C) It allows the insured to assign benefits to a third party.
D) It requires the agent to act in the best interest of the insurer.
Correct ,,,ANSWER,,,: B
Rationale: Indemnity means to "make whole." Health insurance indemnifies the
insured for covered medical expenses, preventing financial gain from a claim,
unlike life insurance which pays a stated benefit regardless of actual loss.
Question 2
Under the California Insurance Code, what is the definition of "Negligence"?
A) The intentional act of causing harm to another person.
B) The failure to use ordinary or reasonable care, resulting in injury to another.
,C) The misrepresentation of policy benefits to an applicant.
D) The failure to pay premiums on the due date.
Correct ,,,ANSWER,,,: B
Rationale: Negligence is a legal concept involving a breach of duty to act with
reasonable care, leading to unintended harm. Intentional acts or misrepresentations
are separate violations.
Question 3
In insurance, "adverse selection" refers to:
A) The tendency of agents to sell policies to high-risk individuals only.
B) The tendency of higher-risk individuals to seek out or retain insurance more
often than lower-risk individuals.
C) The insurer's practice of canceling policies for non-payment.
D) The state's oversight of insurance rating.
Correct ,,,ANSWER,,,: B
Rationale: Adverse selection occurs when there is a lack of symmetry between the
insurer and the applicant. High-risk individuals are more likely to buy insurance,
which can lead to higher claim costs if not properly underwritten.
Question 4
Which type of insurer is owned by its policyholders?
,A) Stock company
B) Reciprocal insurer
C) Surplus lines insurer
D) Mutual company
Correct ,,,ANSWER,,,: D
Rationale: Mutual insurance companies are owned by the policyholders
(members), who may receive dividends. Stock companies are owned by
shareholders.
Question 5
What is the order in which beneficiaries receive proceeds from a life insurance
policy?
A) Primary then contingent
B) Equal distribution to all named
C) Succession of beneficiaries
D) According to the insured's will
Correct ,,,ANSWER,,,: C
Rationale: Beneficiaries receive proceeds in succession - primary beneficiaries
first. If no primary beneficiary survives the insured, contingent beneficiaries
receive the proceeds.
Question 6
, If a company provides group disability insurance to its employees, which of the
following may be tax-deductible?
A) The premiums paid by the employee as a personal expense
B) The premiums paid by the company as a business expense
C) Only the disability benefits received
D) Neither premiums nor benefits
Correct ,,,ANSWER,,,: B
Rationale: Employers may deduct group disability insurance premiums paid on
behalf of employees as a business expense. Employees may also deduct premiums
under certain circumstances, but the employer deduction is standard.
Question 7
Which annuity settlement option provides a stated monthly amount to the annuitant
and upon the annuitant's death the same or a lesser amount paid for the lifetime of
the survivor?
A) Life annuity with period certain
B) Joint and survivorship option
C) Installment refund option
D) Cash refund option
Correct ,,,ANSWER,,,: B
Rationale: The Joint and Survivorship option provides payments for two or more
annuitants. Upon the first death, the survivor continues receiving payments, often
at a reduced amount.
