California Insurance License Exam Prep: Key
Concepts & Correct Answers
What is meant by referring to an insurance policy as a unilateral contract? - ✔✔Only one party makes a
legally enforceable promise
when must insurance records of insurance agents and brokers be made available to the Insurance
Commissioner? - ✔✔At all time
Any situation that presents that possibility of a loss is known as - ✔✔a loss exposure
Which of the following information is not required to be communicated in a Life insurance contract? -
✔✔Personal judgement
the direct distribution of insurance utilizes all of the following to promote the sale of insurance EXCEPT -
✔✔telephone call from an agent
A contract in which one party promises to indemnify another against loss that arises from an unknown
event is - ✔✔an insurance policy
All of the occurrences listed below are example of an insurable event as defined by the California
Insurance Code EXCEPT - ✔✔an insured suffers a financial loss in the state lottery
All of the following statements about aleatory contracts are true EXCEPT - ✔✔the insured and insurer
contribute equally to the contract
All of the following would be considered unfair trade practices EXCEPT - ✔✔committing any act of
discrimination whether it be deemed fair or unfair
,AS authorized by the California Insurance Code, the Insurance Commissioner. has provided standards
which, if any, of the following are automatically acceptable for Mary Brown, a holder of the ClU
designation ? - ✔✔Mary Brown Insurance Services
A contract of indemnity is one in which - ✔✔one party is restored to the same financial position the
party was in before the loss occurred
In insurance terminology, "indernity" means - ✔✔make whole
As defined in the California insurance Code, "insurance" is a - ✔✔contract
What would a person be guilty of who refuses to deliver any books, records, or assets to the
commissioner once a seizure has been executed? - ✔✔A misdemeanor
An agent who is acting as an insurance agent, broker, solicitor, life agent, accident and health, bail agent
acts in which capacity when handing premiums or return premiums for an insured? - ✔✔Fiduciary
Which of the following statements regarding risk is TRUE? - ✔✔Only pure risks are insurable
The purchase of an insurance policy may accomplish all of the following for the insured EXCEPT - ✔✔the
elimination of risk
Insureds are entitled to recover an amount NOT greater than the amount of their loss under the
principle of - ✔✔indemnity
What rule is used to determine the importance of a representation? - ✔✔The materiality of
concealment
The required contents of a policy included all of the following EXCEPT - ✔✔the probability of loss
, All of the following are characteristics of reinsurance EXCEPT it - ✔✔increases the unearned premium
reserve
According to the California Insurance Code, an insurance policy must specify all of the following EXCEPT
the - ✔✔financial rating of the insurer
All of the following qualify as "background information" as defined in Section 1729.2 of the California
Insurance Code, EXCEPT - ✔✔misdemeanor charges filed, not resulting in a conviction
Loss retention is an effective risk management technique when all of the following conditions exist
EXCEPT the - ✔✔probability of loss is unknown
a situation in which there is a possibility of loss or a gain is a - ✔✔speculative risk
why is having a large number of similar exposure units important to insurers/ - ✔✔the greater the
number insured, the more accurately the insurer can predict losses and set appropriate premiums
all if the following are benefits of insurance EXCEPT it - ✔✔eliminates fraudulent losses
who are members of the MEdical information Bureau - ✔✔Life and health insurers
the process by which an insurer decides whether to issue requested insurance is called -
✔✔underwriting
unless it is merely a statement of an expectation or belief, a representation as to the future is
considered which of the following? - ✔✔promise
upon notification of a claimant must be given access to the California Fair Claims Settlement Practices
resolution by all of the following means EXCEPT - ✔✔by interview appointment with the agent of
record.
Concepts & Correct Answers
What is meant by referring to an insurance policy as a unilateral contract? - ✔✔Only one party makes a
legally enforceable promise
when must insurance records of insurance agents and brokers be made available to the Insurance
Commissioner? - ✔✔At all time
Any situation that presents that possibility of a loss is known as - ✔✔a loss exposure
Which of the following information is not required to be communicated in a Life insurance contract? -
✔✔Personal judgement
the direct distribution of insurance utilizes all of the following to promote the sale of insurance EXCEPT -
✔✔telephone call from an agent
A contract in which one party promises to indemnify another against loss that arises from an unknown
event is - ✔✔an insurance policy
All of the occurrences listed below are example of an insurable event as defined by the California
Insurance Code EXCEPT - ✔✔an insured suffers a financial loss in the state lottery
All of the following statements about aleatory contracts are true EXCEPT - ✔✔the insured and insurer
contribute equally to the contract
All of the following would be considered unfair trade practices EXCEPT - ✔✔committing any act of
discrimination whether it be deemed fair or unfair
,AS authorized by the California Insurance Code, the Insurance Commissioner. has provided standards
which, if any, of the following are automatically acceptable for Mary Brown, a holder of the ClU
designation ? - ✔✔Mary Brown Insurance Services
A contract of indemnity is one in which - ✔✔one party is restored to the same financial position the
party was in before the loss occurred
In insurance terminology, "indernity" means - ✔✔make whole
As defined in the California insurance Code, "insurance" is a - ✔✔contract
What would a person be guilty of who refuses to deliver any books, records, or assets to the
commissioner once a seizure has been executed? - ✔✔A misdemeanor
An agent who is acting as an insurance agent, broker, solicitor, life agent, accident and health, bail agent
acts in which capacity when handing premiums or return premiums for an insured? - ✔✔Fiduciary
Which of the following statements regarding risk is TRUE? - ✔✔Only pure risks are insurable
The purchase of an insurance policy may accomplish all of the following for the insured EXCEPT - ✔✔the
elimination of risk
Insureds are entitled to recover an amount NOT greater than the amount of their loss under the
principle of - ✔✔indemnity
What rule is used to determine the importance of a representation? - ✔✔The materiality of
concealment
The required contents of a policy included all of the following EXCEPT - ✔✔the probability of loss
, All of the following are characteristics of reinsurance EXCEPT it - ✔✔increases the unearned premium
reserve
According to the California Insurance Code, an insurance policy must specify all of the following EXCEPT
the - ✔✔financial rating of the insurer
All of the following qualify as "background information" as defined in Section 1729.2 of the California
Insurance Code, EXCEPT - ✔✔misdemeanor charges filed, not resulting in a conviction
Loss retention is an effective risk management technique when all of the following conditions exist
EXCEPT the - ✔✔probability of loss is unknown
a situation in which there is a possibility of loss or a gain is a - ✔✔speculative risk
why is having a large number of similar exposure units important to insurers/ - ✔✔the greater the
number insured, the more accurately the insurer can predict losses and set appropriate premiums
all if the following are benefits of insurance EXCEPT it - ✔✔eliminates fraudulent losses
who are members of the MEdical information Bureau - ✔✔Life and health insurers
the process by which an insurer decides whether to issue requested insurance is called -
✔✔underwriting
unless it is merely a statement of an expectation or belief, a representation as to the future is
considered which of the following? - ✔✔promise
upon notification of a claimant must be given access to the California Fair Claims Settlement Practices
resolution by all of the following means EXCEPT - ✔✔by interview appointment with the agent of
record.
