CA PSI SITE LIFE ACCIDENT AND HEALTH OR
SICKNESS EXAM (LIFE AGENT) LATEST 2025
REAL EXAM COMPLETE 200 QUESTIONS AND
CORRECT DETAILS (VERIFIED ANSWERS )
|ALREADY GRADED A+
Question 1
What is considered to be the primary reason for buying life insurance?
A) Provide living benefits
B) Provide money for college
C) Provide money for retirement
D) Provide death benefits
Correct ,,,answer,,,: D
Rationale: The fundamental purpose of life insurance is to provide financial
protection to beneficiaries upon the death of the insured by paying a death benefit.
Question 2
Which of the following is NOT considered advertising?
A) An illustration
B) A sales presentation
C) A rating from a rating service company, such as A.M. Best
D) Direct mailing from an agency
Correct ,,,answer,,,: C
Rationale: While illustrations, sales presentations, and mailings promote an
insurer or product, ratings from independent services like A.M. Best are third-party
evaluations, not direct advertising produced by the insurer.
,Question 3
A type of insurer that is owned by its policyowners is called:
A) stock
B) domestic
C) in-house
D) mutual
Correct ,,,answer,,,: D
Rationale: A mutual insurance company is owned by its policyholders, who may
receive dividends. A stock company is owned by shareholders.
Question 4
ABC Insurance Company transfers part of their risk to XYZ Insurance Company.
This situation is called:
A) conservation
B) reciprocity
C) reinsurance
D) risk transfer
Correct ,,,answer,,,: C
Rationale: Reinsurance is a transaction where one insurance company (the ceding
company) transfers part of its risk to another insurer (the reinsurer) to reduce its
own potential loss exposure.
Question 5
What kind of life insurance policy issued by a mutual insurer provides a return of
divisible surplus?
A) straight life insurance policy
B) nonparticipating life insurance policy
C) participating life insurance policy
D) divisible surplus life insurance policy
,Correct ,,,answer,,,: C
Rationale: A participating policy, typically issued by mutual insurers, allows
policyowners to receive dividends, which are a return of the divisible surplus.
Question 6
A nonparticipating policy will:
A) provide tax advantages
B) provide a return of premium
C) give policyowners special privileges
D) not pay dividends
Correct ,,,answer,,,: D
Rationale: Nonparticipating policies do not pay dividends because they are
usually issued by stock companies where profits are distributed to shareholders,
not policyowners.
Question 7
Insurance represents the process of risk:
A) assumption
B) selection
C) avoidance
D) transference
Correct ,,,answer,,,: D
Rationale: Insurance is a mechanism for transferring risk of financial loss from an
individual or business to an insurance company in exchange for a premium.
Question 8
The cause of a loss is referred to as a(n):
A) hazard
B) peril
, C) risk
D) adversity
Correct ,,,answer,,,: B
Rationale: A peril is the specific cause of a loss, such as a fire, flood, or death. A
hazard is a condition that increases the chance of a loss.
Question 9
People with higher loss exposure have the tendency to purchase insurance more
often than those at average risk. This is called:
A) preexisting conditions
B) risk retention
C) adverse selection
D) law of large numbers
Correct ,,,answer,,,: C
Rationale: Adverse selection is the tendency of individuals with a higher-than-
average risk of loss to seek or maintain insurance more often than those with
average risk.
Question 10
How do insurers predict the increase of individual risks?
A) Law of large numbers
B) Average mortality incidents
C) U.S. Census
D) Experience of morbidity
Correct ,,,answer,,,: A
Rationale: The law of large numbers states that the larger the number of people
with a similar exposure to loss, the more predictable the actual loss experience will
be, allowing insurers to predict future losses accurately.
SICKNESS EXAM (LIFE AGENT) LATEST 2025
REAL EXAM COMPLETE 200 QUESTIONS AND
CORRECT DETAILS (VERIFIED ANSWERS )
|ALREADY GRADED A+
Question 1
What is considered to be the primary reason for buying life insurance?
A) Provide living benefits
B) Provide money for college
C) Provide money for retirement
D) Provide death benefits
Correct ,,,answer,,,: D
Rationale: The fundamental purpose of life insurance is to provide financial
protection to beneficiaries upon the death of the insured by paying a death benefit.
Question 2
Which of the following is NOT considered advertising?
A) An illustration
B) A sales presentation
C) A rating from a rating service company, such as A.M. Best
D) Direct mailing from an agency
Correct ,,,answer,,,: C
Rationale: While illustrations, sales presentations, and mailings promote an
insurer or product, ratings from independent services like A.M. Best are third-party
evaluations, not direct advertising produced by the insurer.
,Question 3
A type of insurer that is owned by its policyowners is called:
A) stock
B) domestic
C) in-house
D) mutual
Correct ,,,answer,,,: D
Rationale: A mutual insurance company is owned by its policyholders, who may
receive dividends. A stock company is owned by shareholders.
Question 4
ABC Insurance Company transfers part of their risk to XYZ Insurance Company.
This situation is called:
A) conservation
B) reciprocity
C) reinsurance
D) risk transfer
Correct ,,,answer,,,: C
Rationale: Reinsurance is a transaction where one insurance company (the ceding
company) transfers part of its risk to another insurer (the reinsurer) to reduce its
own potential loss exposure.
Question 5
What kind of life insurance policy issued by a mutual insurer provides a return of
divisible surplus?
A) straight life insurance policy
B) nonparticipating life insurance policy
C) participating life insurance policy
D) divisible surplus life insurance policy
,Correct ,,,answer,,,: C
Rationale: A participating policy, typically issued by mutual insurers, allows
policyowners to receive dividends, which are a return of the divisible surplus.
Question 6
A nonparticipating policy will:
A) provide tax advantages
B) provide a return of premium
C) give policyowners special privileges
D) not pay dividends
Correct ,,,answer,,,: D
Rationale: Nonparticipating policies do not pay dividends because they are
usually issued by stock companies where profits are distributed to shareholders,
not policyowners.
Question 7
Insurance represents the process of risk:
A) assumption
B) selection
C) avoidance
D) transference
Correct ,,,answer,,,: D
Rationale: Insurance is a mechanism for transferring risk of financial loss from an
individual or business to an insurance company in exchange for a premium.
Question 8
The cause of a loss is referred to as a(n):
A) hazard
B) peril
, C) risk
D) adversity
Correct ,,,answer,,,: B
Rationale: A peril is the specific cause of a loss, such as a fire, flood, or death. A
hazard is a condition that increases the chance of a loss.
Question 9
People with higher loss exposure have the tendency to purchase insurance more
often than those at average risk. This is called:
A) preexisting conditions
B) risk retention
C) adverse selection
D) law of large numbers
Correct ,,,answer,,,: C
Rationale: Adverse selection is the tendency of individuals with a higher-than-
average risk of loss to seek or maintain insurance more often than those with
average risk.
Question 10
How do insurers predict the increase of individual risks?
A) Law of large numbers
B) Average mortality incidents
C) U.S. Census
D) Experience of morbidity
Correct ,,,answer,,,: A
Rationale: The law of large numbers states that the larger the number of people
with a similar exposure to loss, the more predictable the actual loss experience will
be, allowing insurers to predict future losses accurately.
