CA LIFE PSI EXAM STUDY GUIDE 2026
QUESTIONS AND SOLUTIONS GRADED A+
◍ When must insurance records of insurance agents and brokers be
made available to the Insurance Commissioner? Answer:At all times.
◍ Any situation that presents the possibility of a loss is known as
Answer:a loss exposure
◍ Which of the following information is not required to be
communicated in a Life insurance contract? Answer:Personal judgment.
◍ The direct distribution of insurance utilizes all of the following to
promote the sale of insurance EXCEPT Answer:telephone call from an
agent.
◍ A contract in which one party promises to indemnify another against
loss that arises from an unknown event is Answer:an insurance policy.
◍ All of the occurrences listed below are examples of an insurable event
as defined by the California Insurance Code EXCEPT Answer:an
insured suffers a financial loss in the state lottery
,◍ All of the following statements about aleatory contracts are true
EXCEPT Answer:the insured and insurer contribute equally to the
contract.
◍ All of the following would be considered unfair trade practices
EXCEPT Answer: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 for names used by life insurance
agents. Under these standards which, if any, of the following are
automatically acceptable for Mary Brown, a holder of the CLU
designation? Answer:Mary Brown Insurance Services.
◍ A contract of indemnity is one in which Answer:one party is restored
to the same financial position the party was in before the loss occurred.
◍ In insurance terminology, "indemnity" means Answer:make whole.
◍ As defined in the California insurance Code, "insurance" is a
Answer:contract.
◍ What would a person be guilty of who refuses to deliver any books,
records, or assets to the commissioner once a seizure order has been
executed? Answer:A misdemeanor
, ◍ An agent who is acting as an insurance agent, broker, solicitor, life
agent, accident and health, or bail agent acts in which capacity when
handling premiums or return premiums for an insured?
Answer:Fiduciary
◍ Which of the following statements regarding risk is TRUE?
Answer:Only pure risks are insurable.
◍ The purchase of an insurance policy may accomplish all of the
following for the insured EXCEPT Answer:the elimination of risk.
◍ Insureds are entitled to recover an amount NOT greater than the
amount of their loss under the principle of Answer:indemnity.
◍ What rule is used to determine the importance of a representation?
Answer:The materiality of concealment.
◍ The required contents of a policy include all of the following
EXCEPT Answer:the probability of loss
◍ All of the following are characteristics of reinsurance EXCEPT it
Answer:increases the unearned premium reserve.
QUESTIONS AND SOLUTIONS GRADED A+
◍ When must insurance records of insurance agents and brokers be
made available to the Insurance Commissioner? Answer:At all times.
◍ Any situation that presents the possibility of a loss is known as
Answer:a loss exposure
◍ Which of the following information is not required to be
communicated in a Life insurance contract? Answer:Personal judgment.
◍ The direct distribution of insurance utilizes all of the following to
promote the sale of insurance EXCEPT Answer:telephone call from an
agent.
◍ A contract in which one party promises to indemnify another against
loss that arises from an unknown event is Answer:an insurance policy.
◍ All of the occurrences listed below are examples of an insurable event
as defined by the California Insurance Code EXCEPT Answer:an
insured suffers a financial loss in the state lottery
,◍ All of the following statements about aleatory contracts are true
EXCEPT Answer:the insured and insurer contribute equally to the
contract.
◍ All of the following would be considered unfair trade practices
EXCEPT Answer: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 for names used by life insurance
agents. Under these standards which, if any, of the following are
automatically acceptable for Mary Brown, a holder of the CLU
designation? Answer:Mary Brown Insurance Services.
◍ A contract of indemnity is one in which Answer:one party is restored
to the same financial position the party was in before the loss occurred.
◍ In insurance terminology, "indemnity" means Answer:make whole.
◍ As defined in the California insurance Code, "insurance" is a
Answer:contract.
◍ What would a person be guilty of who refuses to deliver any books,
records, or assets to the commissioner once a seizure order has been
executed? Answer:A misdemeanor
, ◍ An agent who is acting as an insurance agent, broker, solicitor, life
agent, accident and health, or bail agent acts in which capacity when
handling premiums or return premiums for an insured?
Answer:Fiduciary
◍ Which of the following statements regarding risk is TRUE?
Answer:Only pure risks are insurable.
◍ The purchase of an insurance policy may accomplish all of the
following for the insured EXCEPT Answer:the elimination of risk.
◍ Insureds are entitled to recover an amount NOT greater than the
amount of their loss under the principle of Answer:indemnity.
◍ What rule is used to determine the importance of a representation?
Answer:The materiality of concealment.
◍ The required contents of a policy include all of the following
EXCEPT Answer:the probability of loss
◍ All of the following are characteristics of reinsurance EXCEPT it
Answer:increases the unearned premium reserve.
