CA LIFE INSURANCE EXAM 2026/2027 UPDATED WITH
100% CORRECT ANSWERS
What is meant by referring to an insurance policy as a unilateral contract? - Correct answer-Only one
party makes a legally enforceable promise.
When must insurance records of insurance agents and brokers be made available to the Insurance
Commissioner? - Correct answer-At all times.
Any situation that presents the possibility of a loss is known as - Correct answer-a loss exposure
Which of the following information is not required to be communicated in a Life insurance contract? -
Correct answer-Personal judgment.
The direct distribution of insurance utilizes all of the following to promote the sale of insurance EXCEPT -
Correct 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 - Correct answer-an insurance policy.
All of the occurrences listed below are examples of an insurable event as defined by the California
Insurance Code EXCEPT - Correct answer-an insured suffers a financial loss in the state lottery
,All of the following statements about aleatory contracts are true EXCEPT - Correct answer-the insured
and insurer contribute equally to the contract.
All of the following would be considered unfair trade practices EXCEPT - Correct 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? - Correct answer-Mary
Brown Insurance Services.
A contract of indemnity is one in which - Correct answer-one party is restored to the same financial
position the party was in before the loss occurred.
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he
decides to collect distributions. What kind of penalty would the IRA owner pay?
a) 50% tax on the amount not distributed as required
b) No penalties, since the owner is older than 59 ½
c) 10% for early withdrawal
d) 15% for early withdrawal - Correct answer-A
All of the following are duties and responsibilities of producers at the time of application EXCEPT
a) Change any incorrect statement on the application by personally initialing next to the corrected
statement.
b) Explain the nature and type of any receipt the producer is giving to the applicant.
c) Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing
information.
d) Check to make sure that there are no unanswered questions on the application. - Correct answer-A
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches
a specified age, what type of policy is this?
a) Jumping juvenile policy
b) Limited pay whole life policy
,c) Modified life insurance policy
d) Single premium policy - Correct answer-A
Which of the following entities may NOT be an insurer?
a) A limited liability company
b) A natural person
c) The Commissioner
d) A business trust - Correct answer-C
Which of the following products requires a securities license?
a) Fixed annuity
b) Equity Indexed annuity
c) Deferred annuity
d) Variable annuity - Correct answer-D
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates,
without proving insurability, the policy includes a
a) Nonforfeiture option.
b) Guaranteed insurability rider.
c) Paid-up additions option.
d) Cost of living provision. - Correct answer-B
In insurance terminology, "indemnity" means - Correct answer-make whole.
As defined in the California insurance Code, "insurance" is a - Correct 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? - Correct 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? - Correct
answer-Fiduciary
Which of the following statements regarding risk is TRUE? - Correct answer-Only pure risks are
insurable.
The purchase of an insurance policy may accomplish all of the following for the insured EXCEPT - Correct
answer-the elimination of risk.
Insureds are entitled to recover an amount NOT greater than the amount of their loss under the
principle of - Correct answer-indemnity.
What rule is used to determine the importance of a representation? - Correct answer-The materiality of
concealment.
The required contents of a policy include all of the following EXCEPT - Correct answer-the probability of
loss
All of the following are characteristics of reinsurance EXCEPT it - Correct answer-increases the unearned
premium reserve.
According to the California Insurance Code, an insurance policy must specify all of the following EXCEPT
the - Correct answer-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 - Correct answer-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 - Correct answer-probability of loss is unknown.
A situation in which there is a possibility of loss or a gain is a - Correct answer-speculative risk.
100% CORRECT ANSWERS
What is meant by referring to an insurance policy as a unilateral contract? - Correct answer-Only one
party makes a legally enforceable promise.
When must insurance records of insurance agents and brokers be made available to the Insurance
Commissioner? - Correct answer-At all times.
Any situation that presents the possibility of a loss is known as - Correct answer-a loss exposure
Which of the following information is not required to be communicated in a Life insurance contract? -
Correct answer-Personal judgment.
The direct distribution of insurance utilizes all of the following to promote the sale of insurance EXCEPT -
Correct 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 - Correct answer-an insurance policy.
All of the occurrences listed below are examples of an insurable event as defined by the California
Insurance Code EXCEPT - Correct answer-an insured suffers a financial loss in the state lottery
,All of the following statements about aleatory contracts are true EXCEPT - Correct answer-the insured
and insurer contribute equally to the contract.
All of the following would be considered unfair trade practices EXCEPT - Correct 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? - Correct answer-Mary
Brown Insurance Services.
A contract of indemnity is one in which - Correct answer-one party is restored to the same financial
position the party was in before the loss occurred.
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he
decides to collect distributions. What kind of penalty would the IRA owner pay?
a) 50% tax on the amount not distributed as required
b) No penalties, since the owner is older than 59 ½
c) 10% for early withdrawal
d) 15% for early withdrawal - Correct answer-A
All of the following are duties and responsibilities of producers at the time of application EXCEPT
a) Change any incorrect statement on the application by personally initialing next to the corrected
statement.
b) Explain the nature and type of any receipt the producer is giving to the applicant.
c) Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing
information.
d) Check to make sure that there are no unanswered questions on the application. - Correct answer-A
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches
a specified age, what type of policy is this?
a) Jumping juvenile policy
b) Limited pay whole life policy
,c) Modified life insurance policy
d) Single premium policy - Correct answer-A
Which of the following entities may NOT be an insurer?
a) A limited liability company
b) A natural person
c) The Commissioner
d) A business trust - Correct answer-C
Which of the following products requires a securities license?
a) Fixed annuity
b) Equity Indexed annuity
c) Deferred annuity
d) Variable annuity - Correct answer-D
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates,
without proving insurability, the policy includes a
a) Nonforfeiture option.
b) Guaranteed insurability rider.
c) Paid-up additions option.
d) Cost of living provision. - Correct answer-B
In insurance terminology, "indemnity" means - Correct answer-make whole.
As defined in the California insurance Code, "insurance" is a - Correct 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? - Correct 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? - Correct
answer-Fiduciary
Which of the following statements regarding risk is TRUE? - Correct answer-Only pure risks are
insurable.
The purchase of an insurance policy may accomplish all of the following for the insured EXCEPT - Correct
answer-the elimination of risk.
Insureds are entitled to recover an amount NOT greater than the amount of their loss under the
principle of - Correct answer-indemnity.
What rule is used to determine the importance of a representation? - Correct answer-The materiality of
concealment.
The required contents of a policy include all of the following EXCEPT - Correct answer-the probability of
loss
All of the following are characteristics of reinsurance EXCEPT it - Correct answer-increases the unearned
premium reserve.
According to the California Insurance Code, an insurance policy must specify all of the following EXCEPT
the - Correct answer-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 - Correct answer-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 - Correct answer-probability of loss is unknown.
A situation in which there is a possibility of loss or a gain is a - Correct answer-speculative risk.
