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CA PSI Site - Life, Accident and Health
Agent Examination (Life Agent)
Questions and Correct Answers/ Latest
Update / Already Graded
Admitted Insurance Company vs. Non-Admitted Insurance
Company
Ans: 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
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Ans: 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
Ans: One party writes the contract without inout from the other party on a
"take-it-or-leave-it" basis
Aleatory Contract
Ans: 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.
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Indemnity Contract
Ans: An agreement to pay on behalf of another party under specified
circumstances
Unilateral Contract
Ans: 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
4 elements of a valid contract
Ans: 1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
4) Consideration
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Preferred Risks vs Standard Risks
Ans: 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
CA PSI Site - Life, Accident and Health
Agent Examination (Life Agent)
Questions and Correct Answers/ Latest
Update / Already Graded
Admitted Insurance Company vs. Non-Admitted Insurance
Company
Ans: 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
,2 | Page
Ans: 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
Ans: One party writes the contract without inout from the other party on a
"take-it-or-leave-it" basis
Aleatory Contract
Ans: 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.
,3 | Page
Indemnity Contract
Ans: An agreement to pay on behalf of another party under specified
circumstances
Unilateral Contract
Ans: 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
4 elements of a valid contract
Ans: 1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
4) Consideration
, 4 | Page
Preferred Risks vs Standard Risks
Ans: 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
