Summary CA LIFE EXAM - PSI
Questions Latest Update 2026
(Questions and Answers-Verified
solutions
A participating company is also referred to as which type of insurer? - answer-Mutual
insurer
An insurer owned by its policyholders, is called a - answer-Mutual insurer
What is a participating life insurance policy? - answer-Contract that allows the
policyowner to receive a share of surplus in the form of policy dividends
An insurer enter into a contract with a third-party to ensure itself against losses from
insurance policies it issues. What is this agreement called? - answer-Reinsurance
John owns an insurance company that gives him the right to share and then sure
surplus. What kind of policy is this? - answer-Participating
Which of the following is not a characteristic of reinsurance? - answer-Increases the
unearned premium reserved
Which of the following is not a benefit of insurance? - answer-Losses due to fraud are
eliminated
When a mutual insurer becomes a stock company, the process is called - answer-
Demutualization
Which of the following is a contract that involves one party which indemnifies another
one a loss arises from an unknown event? - answer-Insurance policy
Which of the following is an insurer established by a parent company's loss exposure's?
- answer-Captive insurers
Which of the following is not considered to be a definition for the term "loss"? - answer-
Probability that an event will occur
Which of the following is not considered a definition of a risk? - answer-The cause of
loss
, Which of the following best describes the statement; " the more times, and event is
repeated, the more predictable the outcome becomes"? - answer-Law of large numbers
Which of the following would not be accomplished with the purchase of an insurance
policy? - answer-Risk is eliminated
Which of the following is a situation where there is a possibility of either a loss or gain? -
answer-Speculative risk
Which of the following is any situation that presents the possibility of a loss? - answer-
Loss
An insurer having a large number of similar exposure units is considered important
because: - answer-the greater the number insured, the more accurately that is her can
predict losses & set appropriate premiums
Which of these statements correctly describes risks? - answer-Pure risk is the only
insurable risk
Which type of risk is gambling? - answer-Speculative risk
Moral hazard is described as the: - answer-increased chance of a loss because of an
insured's dishonest tendencies
All of the following circumstances must be met for los retention to be an effective, risk
management technique, except - answer-Probability of loss is unknown
All of the following circumstances must be met for lost attention to be an effective risk
management technique, except - answer-Probability of loss is unknown
After a policy has lapsed, which provision allows the insurer to continue coverage -
answer-Reinstatement provision
In a life insurance policy, the entire contract consists of - answer-policy and attached
application
Which policy provision protects the policy owner from unintentional lapse of the
contract? - answer-Grace period
Which of the following is not a common life insurance policy later? - answer-Extended
term
What an accidental death benefit is added to a whole life policy, how does this affect the
policies cash value? - answer-Policies, cash value is not affected
Questions Latest Update 2026
(Questions and Answers-Verified
solutions
A participating company is also referred to as which type of insurer? - answer-Mutual
insurer
An insurer owned by its policyholders, is called a - answer-Mutual insurer
What is a participating life insurance policy? - answer-Contract that allows the
policyowner to receive a share of surplus in the form of policy dividends
An insurer enter into a contract with a third-party to ensure itself against losses from
insurance policies it issues. What is this agreement called? - answer-Reinsurance
John owns an insurance company that gives him the right to share and then sure
surplus. What kind of policy is this? - answer-Participating
Which of the following is not a characteristic of reinsurance? - answer-Increases the
unearned premium reserved
Which of the following is not a benefit of insurance? - answer-Losses due to fraud are
eliminated
When a mutual insurer becomes a stock company, the process is called - answer-
Demutualization
Which of the following is a contract that involves one party which indemnifies another
one a loss arises from an unknown event? - answer-Insurance policy
Which of the following is an insurer established by a parent company's loss exposure's?
- answer-Captive insurers
Which of the following is not considered to be a definition for the term "loss"? - answer-
Probability that an event will occur
Which of the following is not considered a definition of a risk? - answer-The cause of
loss
, Which of the following best describes the statement; " the more times, and event is
repeated, the more predictable the outcome becomes"? - answer-Law of large numbers
Which of the following would not be accomplished with the purchase of an insurance
policy? - answer-Risk is eliminated
Which of the following is a situation where there is a possibility of either a loss or gain? -
answer-Speculative risk
Which of the following is any situation that presents the possibility of a loss? - answer-
Loss
An insurer having a large number of similar exposure units is considered important
because: - answer-the greater the number insured, the more accurately that is her can
predict losses & set appropriate premiums
Which of these statements correctly describes risks? - answer-Pure risk is the only
insurable risk
Which type of risk is gambling? - answer-Speculative risk
Moral hazard is described as the: - answer-increased chance of a loss because of an
insured's dishonest tendencies
All of the following circumstances must be met for los retention to be an effective, risk
management technique, except - answer-Probability of loss is unknown
All of the following circumstances must be met for lost attention to be an effective risk
management technique, except - answer-Probability of loss is unknown
After a policy has lapsed, which provision allows the insurer to continue coverage -
answer-Reinstatement provision
In a life insurance policy, the entire contract consists of - answer-policy and attached
application
Which policy provision protects the policy owner from unintentional lapse of the
contract? - answer-Grace period
Which of the following is not a common life insurance policy later? - answer-Extended
term
What an accidental death benefit is added to a whole life policy, how does this affect the
policies cash value? - answer-Policies, cash value is not affected
