CA PSI Site - Life, Accident and Health
Agent Examination (Life Agent) 2026
Questions and Answers
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 - Correct answer-Admitted Insurance Company vs. Non-Admitted
Insurance Company
Pure risks are insurable but Speculative risks are not
Pure Risks - A possibility of loss, no loss, or gain
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,Pure Risk - A possibility of loss or no loss; there is no possibility for gain - Correct
answer-Pure Risk vs. Speculative Risk
One party writes the contract without inout from the other party on a "take-it-or-
leave-it" basis - Correct answer-Contract of Adhesion
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. - Correct answer-Aleatory Contract
An agreement to pay on behalf of another party under specified circumstances -
Correct answer-Indemnity Contract
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 - Correct answer-Unilateral Contract
1) Competent Parties
2) Legal Purpose
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,3) Agreement (offer and acceptance)
4) Consideration - Correct answer-4 elements of a valid contract
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 - Correct answer-Preferred
Risks vs Standard Risks
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
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, 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 - Correct answer-Human Life Value
Approach vs. Needs Analysis Approach
Life Insurance Disability Rider
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Agent Examination (Life Agent) 2026
Questions and Answers
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 - Correct answer-Admitted Insurance Company vs. Non-Admitted
Insurance Company
Pure risks are insurable but Speculative risks are not
Pure Risks - A possibility of loss, no loss, or gain
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,Pure Risk - A possibility of loss or no loss; there is no possibility for gain - Correct
answer-Pure Risk vs. Speculative Risk
One party writes the contract without inout from the other party on a "take-it-or-
leave-it" basis - Correct answer-Contract of Adhesion
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. - Correct answer-Aleatory Contract
An agreement to pay on behalf of another party under specified circumstances -
Correct answer-Indemnity Contract
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 - Correct answer-Unilateral Contract
1) Competent Parties
2) Legal Purpose
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,3) Agreement (offer and acceptance)
4) Consideration - Correct answer-4 elements of a valid contract
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 - Correct answer-Preferred
Risks vs Standard Risks
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, 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 - Correct answer-Human Life Value
Approach vs. Needs Analysis Approach
Life Insurance Disability Rider
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