CA Life, Accident, & Health Practice
Exam Qs
Why would a large manufacturer choose to self-insure rather than buy an insurance
policy from an insurance company? ...ANSWER...to save insurance premiums by
paying relatively minor losses out of company funds
The federal Risk Retention Act of 1986 contains guidelines for which of the following
entities? ...ANSWER...Risk retention groups
Which of the following is an example of an unauthorized insurance company in
Illinois? ...ANSWER...Company B, an Iowa-based company that does not hold a
certificate of authority in Illinois and sells products that are not approved by the Illinois
insurance department
Which insurance company function calculates company mortality and morbidity rates as
well as the dividends on participating life insurance policies? ...ANSWER...Actuarial
Division
The purpose for the Buyer's Guide, which must be given to every insurance prospect in
the first meeting with a producer, is to: ...ANSWER...explain the general features,
benefits, and conditions of the type of insurance being considered
The purpose for the Policy Summary, which must be given to every insurance applicant
before an application is signed, is to: ...ANSWER...provide buyers with details of the
specific insurance contract they are considering for purchase
The main purpose for errors and omissions insurance (E&O) is to: ...ANSWER...cover
damages that arise due to services a producer non-willfully failed to render
(does not protect against willful misconduct, and will not protect the producer who
willfully engages in an unfair trade practice)
Though not specifically cited in the producer's contract, the producer is expected to
telephone prospects on the insurer's behalf to arrange sales appointments. This is an
example of what kind of producer authority? ...ANSWER...implied authority
,Jerry owns a life insurance policy with premiums payable directly to the insurer's home
office. However, for the past five years Jerry has sent his payments to his agent, who
then forwards them to the insurer. The insurer had accepted this arrangement but then
tries to cancel Jerry's policy when it learns he had died while the premium was being
forwarded by the agent. The insurer will probably not be able to cancel the policy in this
case because of which of the following legal principles?
misrepresentation
waiver
estoppel
fraud ...ANSWER...estoppel
(In this case, the insurance company has allowed Jerry to send payments to his agent
instead of directly to the home office for more than five years. As a result, the insurer
has given up its right to have payments sent to the home office. The insurer is estopped
from later asserting its right to receive direct payment.)
An applicant for a $500,000 whole life insurance policy pays the initial premium along
with his application. In this case, what has the applicant done?
accepted an offer from the insurer
made a counteroffer to the insurer
accepted a counteroffer from the insurer
made an offer to the insurer ...ANSWER...made an offer to the insurer
Ambiguities in an insurance contract are most often interpreted in favor of the
policyowner because insurance contracts are:
unilateral
conditional
contracts of adhesion
aleatory ...ANSWER...contracts of adhesion
For a life insurance contract to be enforceable, which of the following parties must be
legally competent?
insurer
applicant, insurer, and beneficiary
applicant and insurer
applicant ...ANSWER...applicant and insurer
Specific to California, what does the term "twenty-four hour coverage" refer to?
-joint issue of a workers' compensation policy with non-occupational health insurance
coverage
,-a policy that is guaranteed to be issued within 24 hours of application
-coverage that applies to personal property, such as a home or automobile
-long-term care insurance ...ANSWER...joint issue of a workers' compensation policy
with non-occupational health insurance coverage
Which of the following entities regulates the business of insurance in California?
the National Association of Insurance Commissioners
the state government
the state and the federal governments
the federal government ...ANSWER...the state and federal governments
(In addition to state authority, the business of insurance—to the extent it affects or is
associated with interstate commerce—is also regulated by the federal government
under Title 18 of the U.S. Code.)
In California, which of the following statements is correct regarding the state's insurance
Commissioner?
He or she is appointed by the Governor.
He or she is mainly an advocate for licensed insurance companies and their interests.
He or she serves terms of six years.
He or she is an elected official. ...ANSWER...He or she is an elected official
(The people of the state of California elect the Insurance Commissioner for four-year
terms. He or she is mainly an advocate for insurance consumers.)
In California, the state's Insurance Commissioner
serves terms of six years.
is mainly an advocate for licensed insurance companies and their interests.
is appointed by the Governor.
is an elected official. ...ANSWER...is an elected official
Which of the following best defines the main purpose of the California Department of
Insurance?
to protect the interests of California insurance consumers
to set forth and pass insurance laws and regulations
to serve as an advocate for California insurance companies and insurance licensees
to serve as a lobbyist for the interests of California insurance companies and the
insurance business at the federal level ...ANSWER...to protect the interests of California
insurance consumers
(The main purpose of the California Department of Insurance is to serve as an advocate
for insurance consumers and to protect their needs and interests. It administers and
, enforces the laws that the state legislature passes. Through its enforcement
capabilities, the Department also advances the interests of certified insurers and
licensed producers; however, it does not actively lobby for the industry at the federal
level.)
In California, the insurance business is regulated by which of the following?
National Association of Insurance Commissioners
State and federal government
State government
Federal government ...ANSWER...State and federal government
(In addition to state authority, the business of insurance—to the extent it affects or is
associated with interstate commerce—is also regulated by the federal government
under Title 18 of the U.S. Code.)
Being admitted to operate as an insurer and to transact one or more lines of insurance
in California is
automatically granted to any entity if it is admitted in at least one other state.
evidenced by a certificate of authority.
limited to entities organized as stock insurers.
restricted to organizations domiciled in California. ...ANSWER...evidenced by a
certificate of authority.
(Only those persons or entities that have been admitted to act as an insurer may
transact insurance business in California. Admission is secured by receiving a certificate
of authority from the California Commissioner of Insurance.)
The prohibition against and penalty for acting on behalf of a non-admitted insurer does
not apply to whom?
licensed solicitors
licensed life agents
licensed disability agents
licensed surplus lines brokers ...ANSWER...licensed surplus lines brokers
A primary insurer is the insurer that
is domiciled in California but is certified to transact insurance in other states.
accepts ceding business and assumes a part of another insurer's loss exposure.
writes only one line of coverage.
transfers its loss exposure to another insurer in a reinsurance
transaction. ...ANSWER...transfers its loss exposure to another insurer in a reinsurance
transaction.
Exam Qs
Why would a large manufacturer choose to self-insure rather than buy an insurance
policy from an insurance company? ...ANSWER...to save insurance premiums by
paying relatively minor losses out of company funds
The federal Risk Retention Act of 1986 contains guidelines for which of the following
entities? ...ANSWER...Risk retention groups
Which of the following is an example of an unauthorized insurance company in
Illinois? ...ANSWER...Company B, an Iowa-based company that does not hold a
certificate of authority in Illinois and sells products that are not approved by the Illinois
insurance department
Which insurance company function calculates company mortality and morbidity rates as
well as the dividends on participating life insurance policies? ...ANSWER...Actuarial
Division
The purpose for the Buyer's Guide, which must be given to every insurance prospect in
the first meeting with a producer, is to: ...ANSWER...explain the general features,
benefits, and conditions of the type of insurance being considered
The purpose for the Policy Summary, which must be given to every insurance applicant
before an application is signed, is to: ...ANSWER...provide buyers with details of the
specific insurance contract they are considering for purchase
The main purpose for errors and omissions insurance (E&O) is to: ...ANSWER...cover
damages that arise due to services a producer non-willfully failed to render
(does not protect against willful misconduct, and will not protect the producer who
willfully engages in an unfair trade practice)
Though not specifically cited in the producer's contract, the producer is expected to
telephone prospects on the insurer's behalf to arrange sales appointments. This is an
example of what kind of producer authority? ...ANSWER...implied authority
,Jerry owns a life insurance policy with premiums payable directly to the insurer's home
office. However, for the past five years Jerry has sent his payments to his agent, who
then forwards them to the insurer. The insurer had accepted this arrangement but then
tries to cancel Jerry's policy when it learns he had died while the premium was being
forwarded by the agent. The insurer will probably not be able to cancel the policy in this
case because of which of the following legal principles?
misrepresentation
waiver
estoppel
fraud ...ANSWER...estoppel
(In this case, the insurance company has allowed Jerry to send payments to his agent
instead of directly to the home office for more than five years. As a result, the insurer
has given up its right to have payments sent to the home office. The insurer is estopped
from later asserting its right to receive direct payment.)
An applicant for a $500,000 whole life insurance policy pays the initial premium along
with his application. In this case, what has the applicant done?
accepted an offer from the insurer
made a counteroffer to the insurer
accepted a counteroffer from the insurer
made an offer to the insurer ...ANSWER...made an offer to the insurer
Ambiguities in an insurance contract are most often interpreted in favor of the
policyowner because insurance contracts are:
unilateral
conditional
contracts of adhesion
aleatory ...ANSWER...contracts of adhesion
For a life insurance contract to be enforceable, which of the following parties must be
legally competent?
insurer
applicant, insurer, and beneficiary
applicant and insurer
applicant ...ANSWER...applicant and insurer
Specific to California, what does the term "twenty-four hour coverage" refer to?
-joint issue of a workers' compensation policy with non-occupational health insurance
coverage
,-a policy that is guaranteed to be issued within 24 hours of application
-coverage that applies to personal property, such as a home or automobile
-long-term care insurance ...ANSWER...joint issue of a workers' compensation policy
with non-occupational health insurance coverage
Which of the following entities regulates the business of insurance in California?
the National Association of Insurance Commissioners
the state government
the state and the federal governments
the federal government ...ANSWER...the state and federal governments
(In addition to state authority, the business of insurance—to the extent it affects or is
associated with interstate commerce—is also regulated by the federal government
under Title 18 of the U.S. Code.)
In California, which of the following statements is correct regarding the state's insurance
Commissioner?
He or she is appointed by the Governor.
He or she is mainly an advocate for licensed insurance companies and their interests.
He or she serves terms of six years.
He or she is an elected official. ...ANSWER...He or she is an elected official
(The people of the state of California elect the Insurance Commissioner for four-year
terms. He or she is mainly an advocate for insurance consumers.)
In California, the state's Insurance Commissioner
serves terms of six years.
is mainly an advocate for licensed insurance companies and their interests.
is appointed by the Governor.
is an elected official. ...ANSWER...is an elected official
Which of the following best defines the main purpose of the California Department of
Insurance?
to protect the interests of California insurance consumers
to set forth and pass insurance laws and regulations
to serve as an advocate for California insurance companies and insurance licensees
to serve as a lobbyist for the interests of California insurance companies and the
insurance business at the federal level ...ANSWER...to protect the interests of California
insurance consumers
(The main purpose of the California Department of Insurance is to serve as an advocate
for insurance consumers and to protect their needs and interests. It administers and
, enforces the laws that the state legislature passes. Through its enforcement
capabilities, the Department also advances the interests of certified insurers and
licensed producers; however, it does not actively lobby for the industry at the federal
level.)
In California, the insurance business is regulated by which of the following?
National Association of Insurance Commissioners
State and federal government
State government
Federal government ...ANSWER...State and federal government
(In addition to state authority, the business of insurance—to the extent it affects or is
associated with interstate commerce—is also regulated by the federal government
under Title 18 of the U.S. Code.)
Being admitted to operate as an insurer and to transact one or more lines of insurance
in California is
automatically granted to any entity if it is admitted in at least one other state.
evidenced by a certificate of authority.
limited to entities organized as stock insurers.
restricted to organizations domiciled in California. ...ANSWER...evidenced by a
certificate of authority.
(Only those persons or entities that have been admitted to act as an insurer may
transact insurance business in California. Admission is secured by receiving a certificate
of authority from the California Commissioner of Insurance.)
The prohibition against and penalty for acting on behalf of a non-admitted insurer does
not apply to whom?
licensed solicitors
licensed life agents
licensed disability agents
licensed surplus lines brokers ...ANSWER...licensed surplus lines brokers
A primary insurer is the insurer that
is domiciled in California but is certified to transact insurance in other states.
accepts ceding business and assumes a part of another insurer's loss exposure.
writes only one line of coverage.
transfers its loss exposure to another insurer in a reinsurance
transaction. ...ANSWER...transfers its loss exposure to another insurer in a reinsurance
transaction.
