California PSI Life, Accident, and Health or Sickness
Examination (2025)
Exam with Correct and Verified Answers
What is considered to be the primary reason for buying life insurance?
Provide death benefits
Provide living benefits
Provide money for college
Provide money for retirement
Provide death benefits
Which of the following is NOT considered advertising?
An illustration
A sales presentation
Direct mailing from an agency
A rating from a rating service company, such as A.M. Best
A rating from a rating service company, such as A.M. Best
A type of insurer that is owned by its policyowners is called
stock
domestic
in-house
mutual
mutual
ABC Insurance Company transfers part of their risk to XYZ Insurance Company. This situation
is called
conservation
reciprocity
reinsurance
risk transfer
reinsurance
,What kind of life insurance policy issued by a mutual insurer provides a return of divisible
surplus?
straight life insurance policy
nonparticipating life insurance policy
participating life insurance policy
divisible surplus life insurance policy
participating life insurance policy
A nonparticipating policy will
provide tax advantages
provide a return of premium
give policyowners special privileges
not pay dividends
not pay dividends
Karen is a producer who has obtained personal information about a client without having a
legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for
this?
$15,000
$0
$10,000
$5,000
$10,000
The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT
political organizations
surveys
charities
insurance sales calls
insurance sales calls
The Fair Credit and Reporting Act's main purpose is to
protect insurers from an applicant's misrepresentation
assist in the underwriting of insurance policies
,assist an insurer in determining an applicant's creditworthiness
protect consumers with guidelines regarding credit reporting and distribution
protect consumers with guidelines regarding credit reporting and distribution
Why are dividends from a mutual insurer not subject to taxation?
Because dividends are considered to be a return of premium
Because dividends are already subject to capital gains
Because dividends are payable directly to the policyholder
Because insurance premiums are tax-deductible
Because dividends are considered to be a return of premium
All of the following are examples of pure risk EXCEPT
Injured while playing football
Falling at a casino and breaking a hip
Jewelry stolen during a home robbery
Losing money at a casino
Losing money at a casino
How do insurers predict the increase of individual risks?
Law of large numbers
Average mortality incidents
U.S. Census
Experience of morbidity
Law of large numbers
What is known as the immediate specific event causing loss and giving rise to risk?
Hazard
Loss factor
Peril
Liability
Peril
Which of the following is considered to be an event or condition that increases the probability of
an insured's loss?
Risk
, Indemnity
Peril
Hazard
Hazard
An example of risk sharing would be
Doctors pooling their money to cover malpractice exposures
Adding more security to a high-risk building
Buying an insurance policy to cover potential liabilities
Choosing not to invest in the stock market
Doctors pooling their money to cover malpractice exposures
An individual who removes the risk of losing money in the stock market by never purchasing
stocks is said to be engaging in
Risk transference
Risk retention
Risk reduction
Risk avoidance
Risk avoidance
Insurance companies determine risk exposure by which of the following?
Insurable interest
Population table data
Law of large numbers and risk pooling
Insurance exchanges
Law of large numbers and risk pooling
Insurance represents the process of risk
assumption
selection
avoidance
transference
transference
The cause of a loss is referred to as a(n)
Examination (2025)
Exam with Correct and Verified Answers
What is considered to be the primary reason for buying life insurance?
Provide death benefits
Provide living benefits
Provide money for college
Provide money for retirement
Provide death benefits
Which of the following is NOT considered advertising?
An illustration
A sales presentation
Direct mailing from an agency
A rating from a rating service company, such as A.M. Best
A rating from a rating service company, such as A.M. Best
A type of insurer that is owned by its policyowners is called
stock
domestic
in-house
mutual
mutual
ABC Insurance Company transfers part of their risk to XYZ Insurance Company. This situation
is called
conservation
reciprocity
reinsurance
risk transfer
reinsurance
,What kind of life insurance policy issued by a mutual insurer provides a return of divisible
surplus?
straight life insurance policy
nonparticipating life insurance policy
participating life insurance policy
divisible surplus life insurance policy
participating life insurance policy
A nonparticipating policy will
provide tax advantages
provide a return of premium
give policyowners special privileges
not pay dividends
not pay dividends
Karen is a producer who has obtained personal information about a client without having a
legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for
this?
$15,000
$0
$10,000
$5,000
$10,000
The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT
political organizations
surveys
charities
insurance sales calls
insurance sales calls
The Fair Credit and Reporting Act's main purpose is to
protect insurers from an applicant's misrepresentation
assist in the underwriting of insurance policies
,assist an insurer in determining an applicant's creditworthiness
protect consumers with guidelines regarding credit reporting and distribution
protect consumers with guidelines regarding credit reporting and distribution
Why are dividends from a mutual insurer not subject to taxation?
Because dividends are considered to be a return of premium
Because dividends are already subject to capital gains
Because dividends are payable directly to the policyholder
Because insurance premiums are tax-deductible
Because dividends are considered to be a return of premium
All of the following are examples of pure risk EXCEPT
Injured while playing football
Falling at a casino and breaking a hip
Jewelry stolen during a home robbery
Losing money at a casino
Losing money at a casino
How do insurers predict the increase of individual risks?
Law of large numbers
Average mortality incidents
U.S. Census
Experience of morbidity
Law of large numbers
What is known as the immediate specific event causing loss and giving rise to risk?
Hazard
Loss factor
Peril
Liability
Peril
Which of the following is considered to be an event or condition that increases the probability of
an insured's loss?
Risk
, Indemnity
Peril
Hazard
Hazard
An example of risk sharing would be
Doctors pooling their money to cover malpractice exposures
Adding more security to a high-risk building
Buying an insurance policy to cover potential liabilities
Choosing not to invest in the stock market
Doctors pooling their money to cover malpractice exposures
An individual who removes the risk of losing money in the stock market by never purchasing
stocks is said to be engaging in
Risk transference
Risk retention
Risk reduction
Risk avoidance
Risk avoidance
Insurance companies determine risk exposure by which of the following?
Insurable interest
Population table data
Law of large numbers and risk pooling
Insurance exchanges
Law of large numbers and risk pooling
Insurance represents the process of risk
assumption
selection
avoidance
transference
transference
The cause of a loss is referred to as a(n)
