CA PSI SITE - LIFE, ACCIDENT AND HEALTH AGENT EXAMINATION (LIFE AGENT) LATEST 2024-2025
ACTUAL EXAM 100 QUESTIONS AND CORRECT DETAILED ANSWERS
Admitted Insurance Company vs. Non-Admitted Insurance Company - correct answer 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
Pure Risk vs. Speculative Risk - correct answer Pure risks are insurable but Speculative risks are
not
Pure Risks - A possibility of loss, no loss, or gain
Pure Risk - A possibility of loss or no loss; there is no possibility for gain
Contract of Adhesion - correct answer One party writes the contract without inout from the
other party on a "take-it-or-leave-it" basis
Aleatory Contract - correct answer 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.
Indemnity Contract - correct answer An agreement to pay on behalf of another party under
specified circumstances
Unilateral Contract - correct answer 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
,CA PSI SITE - LIFE, ACCIDENT AND HEALTH AGENT EXAMINATION (LIFE AGENT) LATEST 2024-2025
ACTUAL EXAM 100 QUESTIONS AND CORRECT DETAILED ANSWERS
4 elements of a valid contract - correct answer 1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
4) Consideration
Preferred Risks vs Standard Risks - correct answer 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
Human Life Value Approach vs. Needs Analysis Approach - correct answer 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
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:
, CA PSI SITE - LIFE, ACCIDENT AND HEALTH AGENT EXAMINATION (LIFE AGENT) LATEST 2024-2025
ACTUAL EXAM 100 QUESTIONS AND CORRECT DETAILED ANSWERS
- 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 financial needs after death (such as retirement plan,
other insurance, liquid investments, separate savings)
Waiver of Premium - correct answer Life Insurance Disability Rider
If the insured becomes totally disabled, the insurer will waive premiums for the duration of the
disability or the end of the policy, whichever occurs first.
To qualify for the waiver, the insured must be disabled for a waiting period of 3-6 months.
The policyowner must continue to pay premiums during the waiting period, but once eligible,
the waiver is retroactive to the start of the disability and the premiums will be refunded.
During the disability, the insured will credit the premiums to the policy and all benefits, such as
cash value accumulation and dividend payments, will continue.
Disability Income Rider - correct answer Life Insurance Disability Rider
In the event of total disability and after the initial waiting period (such as 6 months), premiums
are waived and the insured is paid a monthly income.
The monthly disability income benefit is typically limited to a percentage of the face value.
The benefit paid from the rider does not reduce the death benefits paid out upon death.
Accidental Death Benefit rider - correct answer Life Insurance Rider affecting the death benefit
amount
ACTUAL EXAM 100 QUESTIONS AND CORRECT DETAILED ANSWERS
Admitted Insurance Company vs. Non-Admitted Insurance Company - correct answer 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
Pure Risk vs. Speculative Risk - correct answer Pure risks are insurable but Speculative risks are
not
Pure Risks - A possibility of loss, no loss, or gain
Pure Risk - A possibility of loss or no loss; there is no possibility for gain
Contract of Adhesion - correct answer One party writes the contract without inout from the
other party on a "take-it-or-leave-it" basis
Aleatory Contract - correct answer 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.
Indemnity Contract - correct answer An agreement to pay on behalf of another party under
specified circumstances
Unilateral Contract - correct answer 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
,CA PSI SITE - LIFE, ACCIDENT AND HEALTH AGENT EXAMINATION (LIFE AGENT) LATEST 2024-2025
ACTUAL EXAM 100 QUESTIONS AND CORRECT DETAILED ANSWERS
4 elements of a valid contract - correct answer 1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
4) Consideration
Preferred Risks vs Standard Risks - correct answer 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
Human Life Value Approach vs. Needs Analysis Approach - correct answer 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
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:
, CA PSI SITE - LIFE, ACCIDENT AND HEALTH AGENT EXAMINATION (LIFE AGENT) LATEST 2024-2025
ACTUAL EXAM 100 QUESTIONS AND CORRECT DETAILED ANSWERS
- 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 financial needs after death (such as retirement plan,
other insurance, liquid investments, separate savings)
Waiver of Premium - correct answer Life Insurance Disability Rider
If the insured becomes totally disabled, the insurer will waive premiums for the duration of the
disability or the end of the policy, whichever occurs first.
To qualify for the waiver, the insured must be disabled for a waiting period of 3-6 months.
The policyowner must continue to pay premiums during the waiting period, but once eligible,
the waiver is retroactive to the start of the disability and the premiums will be refunded.
During the disability, the insured will credit the premiums to the policy and all benefits, such as
cash value accumulation and dividend payments, will continue.
Disability Income Rider - correct answer Life Insurance Disability Rider
In the event of total disability and after the initial waiting period (such as 6 months), premiums
are waived and the insured is paid a monthly income.
The monthly disability income benefit is typically limited to a percentage of the face value.
The benefit paid from the rider does not reduce the death benefits paid out upon death.
Accidental Death Benefit rider - correct answer Life Insurance Rider affecting the death benefit
amount
