CALIFORNIA PSI LIFE INSURANCE EXAM III
2026 REVIEW PAPER COMPLETE QUESTIONS
WITH EXPERT SOLUTIONS AND MARKING
SCHEME
◉ 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 even is
,Answer: An insurance policy
◉ All of the occurrences listed below area examples of an insurable
event as defined by the California insurance Code EXCEPT
Answer: An insured suffers a financial loss in the stat 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 standard for names used by life
insurance agents. Under these standards which, if any, of these
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"
Answer: 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 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 statement regarding risk id TRUE?
Answer: Only pure risks are insurable
, ◉ The purchase of an insurance polity 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 requred contents of a policy included 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
◉ According to the California Insurance Code, an insurance policy
must specify all of the following EXCEPT the
Answer: Financial rating of the insurer
2026 REVIEW PAPER COMPLETE QUESTIONS
WITH EXPERT SOLUTIONS AND MARKING
SCHEME
◉ 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 even is
,Answer: An insurance policy
◉ All of the occurrences listed below area examples of an insurable
event as defined by the California insurance Code EXCEPT
Answer: An insured suffers a financial loss in the stat 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 standard for names used by life
insurance agents. Under these standards which, if any, of these
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"
Answer: 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 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 statement regarding risk id TRUE?
Answer: Only pure risks are insurable
, ◉ The purchase of an insurance polity 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 requred contents of a policy included 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
◉ According to the California Insurance Code, an insurance policy
must specify all of the following EXCEPT the
Answer: Financial rating of the insurer
