CA PSI Site - Life, Accident and Health Agent EXAM
COMPLETE 250 QUESTIONS AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) |ALREADY GRADED A+
Admitted Insurance Company vs. Non-Admitted Insurance Company -
CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER One party writes the
contract without inout from the other party on a "take-it-or-leave-it"
basis
Aleatory Contract - CORRECT ANSWER 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 - CORRECT ANSWER An agreement to pay on
behalf of another party under specified circumstances
,Unilateral Contract - CORRECT ANSWER 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 - CORRECT ANSWER 1) Competent
Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
4) Consideration
Preferred Risks vs Standard Risks - CORRECT ANSWER 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 - CORRECT
ANSWER 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 - CORRECT ANSWER Life Insurance Disability Rider
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.
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.
Disability Income Rider - CORRECT ANSWER Life Insurance Disability
Rider
In the event of total disability and after the initial waiting period (such
as 6 months), premiums are waived and the insured is paid a monthly
income.
The monthly disability income benefit is typically limited to a
percentage of the face value.
, The benefit paid from the rider does not reduce the death benefits paid
out upon death.
Accidental Death Benefit rider - CORRECT ANSWER Life Insurance
Rider affecting the death benefit amount
May be called multiple indemnity rider
In the event of a claim, the policy normally pays double or triple the
face amount only if the insured's death was a result of an accident.
The benefit is payable only if death occurs before a specific age and
within 90 days of the accident
Separate Account (Variable) vs General Account (Life Insurance) -
CORRECT ANSWER The separate account is invested in debt or equity
securities as offered by the insurance company.
o Both the cash value in the separate account and the death benefit
will fluctuate based on market conditions and performance of the
subaccounts.
o There is no guaranteed minimum return on the cash value in the
separate account and the policy may lose both cash value and death
benefit if there are market losses.
o The death benefit is recalculated annually.
The general account provides a fixed rate of interest and the cash
value in the general account provides for a guaranteed minimum death
benefit.
Viatical Settlement - CORRECT ANSWER An agreement between a
policyowner and a third-party buyer to purchase the life policy
covering a person who is diagnosed as terminally ill with less than 24
months remaining life expectancy.
Principle of Indemnity - CORRECT ANSWER To indemnify means to
restore a person, in whole or in part, to the same physical or financial
condition which existed prior to a loss, but without profit or gain.
COMPLETE 250 QUESTIONS AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) |ALREADY GRADED A+
Admitted Insurance Company vs. Non-Admitted Insurance Company -
CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER One party writes the
contract without inout from the other party on a "take-it-or-leave-it"
basis
Aleatory Contract - CORRECT ANSWER 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 - CORRECT ANSWER An agreement to pay on
behalf of another party under specified circumstances
,Unilateral Contract - CORRECT ANSWER 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 - CORRECT ANSWER 1) Competent
Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
4) Consideration
Preferred Risks vs Standard Risks - CORRECT ANSWER 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 - CORRECT
ANSWER 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 - CORRECT ANSWER Life Insurance Disability Rider
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.
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.
Disability Income Rider - CORRECT ANSWER Life Insurance Disability
Rider
In the event of total disability and after the initial waiting period (such
as 6 months), premiums are waived and the insured is paid a monthly
income.
The monthly disability income benefit is typically limited to a
percentage of the face value.
, The benefit paid from the rider does not reduce the death benefits paid
out upon death.
Accidental Death Benefit rider - CORRECT ANSWER Life Insurance
Rider affecting the death benefit amount
May be called multiple indemnity rider
In the event of a claim, the policy normally pays double or triple the
face amount only if the insured's death was a result of an accident.
The benefit is payable only if death occurs before a specific age and
within 90 days of the accident
Separate Account (Variable) vs General Account (Life Insurance) -
CORRECT ANSWER The separate account is invested in debt or equity
securities as offered by the insurance company.
o Both the cash value in the separate account and the death benefit
will fluctuate based on market conditions and performance of the
subaccounts.
o There is no guaranteed minimum return on the cash value in the
separate account and the policy may lose both cash value and death
benefit if there are market losses.
o The death benefit is recalculated annually.
The general account provides a fixed rate of interest and the cash
value in the general account provides for a guaranteed minimum death
benefit.
Viatical Settlement - CORRECT ANSWER An agreement between a
policyowner and a third-party buyer to purchase the life policy
covering a person who is diagnosed as terminally ill with less than 24
months remaining life expectancy.
Principle of Indemnity - CORRECT ANSWER To indemnify means to
restore a person, in whole or in part, to the same physical or financial
condition which existed prior to a loss, but without profit or gain.
