CA LIFE EXAM – PSI Life Questions and Answers 100% Verified

CA LIFE EXAM – PSI Life Questions and Answers 100% Verified


1. A participating company is also referred to as which type of insurer?: Mutual insurer
a a a a a a a a a a a a a


2. An insurer owned by its policyholders, is called a: Mutual insurer
a a a a a a a a a a


3. What is a participating life insurance policy?: Contract that allows the policy-
a a a a a a a a a a a


owner to receive a share of surplus in the form of policy dividends
a a a a a a a a a a a a a


4. An insurer enter into a contract with a third-
a a a a a a a a


party to ensure itself against losses from insurance policies it issues.What is this agreem
a a a a a a a a a a a a a a


ent called?: Rein- surance
a a a


5. John owns an insurance company that gives him the right to share and then sure surplus.
a a a a a a a a a a a a a a a


What kind of policy is this?: Participating
a a a a a a a


6. Which of the following is not a characteristic of reinsurance?: Increases the unearned pr
a a a a a a a a a a a a a


emium reserved a


7. Which of the following is not a benefit of insurance?: Losses due to fraud are eliminated
a a a a a a a a a a a a a a a


8. When a mutual insurer becomes a stock company, the process is called: -
a a a a a a a a a a a a


Demutualization
9. Which of the following is a contract that involves one party which indemni-
a a a a a a a a a a a a


fies another one a loss arises from an unknown event?: Insurance policy
a a a a a a a a a a a a


10. Which of the following is an insurer established by a parent company's loss expos
a a a a a a a a a a a a a


ure's?: Captive insurers
a a


11. Which of the following is not considered to be a definition for the term "loss"?: Pr
a a a a a a a a a a a a a a a


obability that an event will occur
a a a a a


12. Which of the following is not considered a definition of a risk?: The cause of loss
a a a a a a a a a a a a a a a


13. Which of the following best describes the statement; " the more times, and event is rep
a a a a a a a a a a a a a a a


eated, the more predictable the outcome becomes"?: Law of large numbers
a a a a a a a a a a


14. Which of the following would not be accomplished with the purchase of an insurance p
a a a a a a a a a a a a a a


olicy?: Risk is eliminated
a a a


15. Which of the following is a situation where there is a possibility of either a loss or gain
a a a a a a a a a a a a a a a a a


?: Speculative risk
a a


16. Which of the following is any situation that presents the possibility of a loss?: Loss
a a a a a a a a a a a a a a


1a/a
17

,17. An insurer having a large number of similar exposure units is considered important b
a a a a a a a a a a a a a


ecause:: the greater the number insured, the more accurately that is her can predict losses
a a a a a a a a a a a a a a a


& set appropriate premiums
a a a


18. Which of these statements correctly describes risks?: Pure risk is the only insurable ri
a a a a a a a a a a a a a


sk
19. Which type of risk is gambling?: Speculative risk
a a a a a a a




2a/a
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, 20. Moral hazard is described as the:: increased chance of a loss because of an insured's d
a a a a a a a a a a a a a a a


ishonest tendencies a


21. All of the following circumstances must be met for los retention to be an effective, ri
a a a a a a a a a a a a a a a


sk management technique, except: Probability of loss is unknown
a a a a a a a a


22. All of the following circumstances must be met for lost attention to be an effective ri
a a a a a a a a a a a a a a a


sk management technique, except: Probability of loss is unknown
a a a a a a a a


23. After a policy has lapsed, which provision allows the insurer to continue coverage: R
a a a a a a a a a a a a a


einstatement provision a


24. In a life insurance policy, the entire contract consists of: policy and attached application
a a a a a a a a a a a a a


25. Which policy provision protects the policy owner from unintentional lapse of the contr
a a a a a a a a a a a a


act?: Grace period a a


26. Which of the following is not a common life insurance policy later?: Ex- tended term
a a a a a a a a a a a a a a


27. What an accidental death benefit is added to a whole life policy, how does this affect t
a a a a a a a a a a a a a a a a


he policies cash value?: Policies, cash value is not affected
a a a a a a a a a


28. A life insurance policy can be surrendered for its cash value under which policy provi
a a a a a a a a a a a a a a


sion?: Nonforfeiture options a a


29. Which of the following does a policy owner not have the right to change?-
a a a a a a a a a a a a a


: Dividend schedule
a a


30. Which statement is true regarding policy dividends?: A dividend option is selected by
a a a a a a a a a a a a


athe insured at the time of the policy purchase
a a a a a a a a


31. What does the grace period allow a life insurance policy to do?: Make a premium pa
a a a a a a a a a a a a a a a


yment after the due date without any loss of coverage
a a a a a a a a a


32. If an insured dies because of an accident, which type of life insurance rider will provide
a a a a a a a a a a a a a a a


aadditional coverage?: Accidental death rider a a a a


33. How is a life insurance policy dividend legally defined?: A return of excess premium an
a a a a a a a a a a a a a a


d non-taxable a


34. An insurer can be protected from adverse selection by which policy provi-
a a a a a a a a a a a


asion?: Suicide clause a a


35. What does the guaranteed insurability option allow and insured to do?: -
a a a a a a a a a a a


Purchase additional coverage with no evidence of insurability required
a a a a a a a a


36. How are the acts of war and aviation treated under a group life insurance policy?: Pol
a a a a a a a a a a a a a a a


3a/a
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