California Insurance Exam 2026
Questions and Answers
Two methods of determining insurance need: - Correct Answer -- Human Life
Approach
- Needs Approach
Human Life Value Approach~ - Correct Answer -- One of two ways of calculating
insurance need.
- By discounting estimated future income
- Calculating the amount of life insurance a family will need based on the financial
loss that they will suffer if the insured person were to pass away today
- 10X salary
- Based on age, gender, planned retirement age, occupation, annual wage,
employment benefits, as well as the personal and financial information of the
spouse and/or dependent children.
*Needs Approach - Correct Answer -Ask yourself:
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,1. How much will be needed at death to meet obligations.
2. How much future income is needed to sustain the household.
- Focuses on the financial needs of the family
- Considers final expenses
- Considers disability income
- Consideres monthly income
Main list of private insurance companies - Correct Answer -- Stock insurers
- Mutual insurers
- Lloyd's of London
- Reinsurers
- Risk retention groups
- Fraternal benefit societies
- Home service insurers
Government supplied insurance - Correct Answer -- OASDI (Social Security)
- Medicare
- Medicaid
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,- Military plans (SGLI & VGLI)
Lloyd's of London - Correct Answer -- Take greater risks and charge larger
premiums.
- A British insurance and reinsurance marketplace
- Come together to pool and spread risk
Reinsurers - Correct Answer -Companies that take part of the risk of insurance
companies. (The company that is taking a part of the risk)
Ceding Company - Correct Answer -The company that is transferring the risk
Risk retention group - Correct Answer -A mutual company formed to cover a
bunch of people in the same occupation.
Fraternal benefit society - Correct Answer -Membership groups that are created for
membership to purchase insurance and gain other benefits.
Home service insurers - Correct Answer -- Sell low dollar value policies (e.g.
$1000/$2000 of face amount)
- Paid for by bank draft of check sent in by mail
Insurance is sold through - Correct Answer -Career agents
Brokers
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, Aka Producers (independent insurance agents)
Agent - Correct Answer -- Sells the company's products to the public
- When someone becomes an agent, they become a "field underwriter"
- Develops base for long-term sources of clients by using referrals, occupational,
and special-interest groups to compile lists of prospects.
- Approaches potential clients by utilizing mailings and phone solicitation; making
presentations to groups at company-sponsored gatherings; speaking publicly to
community groups on the subject of financial well-being.
- Determines clients' particular needs and financial situations by scheduling fact-
finding appointments; determining extent of present coverage and investments;
ascertaining long-term goals.
- Develops a coordinated protection plan by calculating and quoting rates for
immediate coverage action and long-term strategy implementation.
- Obtains underwriting approval by completing application for coverage.
- Completes coverage by delivering policy; planning future follow-up visits and
evaluations of needs.
- Provides continuing service by providing direct deposit forms; processing
changes in beneficiary and policy loan applications.
©COPYRIGHT 2025 ALL RIGHTS RESERVED 4
Questions and Answers
Two methods of determining insurance need: - Correct Answer -- Human Life
Approach
- Needs Approach
Human Life Value Approach~ - Correct Answer -- One of two ways of calculating
insurance need.
- By discounting estimated future income
- Calculating the amount of life insurance a family will need based on the financial
loss that they will suffer if the insured person were to pass away today
- 10X salary
- Based on age, gender, planned retirement age, occupation, annual wage,
employment benefits, as well as the personal and financial information of the
spouse and/or dependent children.
*Needs Approach - Correct Answer -Ask yourself:
©COPYRIGHT 2025 ALL RIGHTS RESERVED 1
,1. How much will be needed at death to meet obligations.
2. How much future income is needed to sustain the household.
- Focuses on the financial needs of the family
- Considers final expenses
- Considers disability income
- Consideres monthly income
Main list of private insurance companies - Correct Answer -- Stock insurers
- Mutual insurers
- Lloyd's of London
- Reinsurers
- Risk retention groups
- Fraternal benefit societies
- Home service insurers
Government supplied insurance - Correct Answer -- OASDI (Social Security)
- Medicare
- Medicaid
©COPYRIGHT 2025 ALL RIGHTS RESERVED 2
,- Military plans (SGLI & VGLI)
Lloyd's of London - Correct Answer -- Take greater risks and charge larger
premiums.
- A British insurance and reinsurance marketplace
- Come together to pool and spread risk
Reinsurers - Correct Answer -Companies that take part of the risk of insurance
companies. (The company that is taking a part of the risk)
Ceding Company - Correct Answer -The company that is transferring the risk
Risk retention group - Correct Answer -A mutual company formed to cover a
bunch of people in the same occupation.
Fraternal benefit society - Correct Answer -Membership groups that are created for
membership to purchase insurance and gain other benefits.
Home service insurers - Correct Answer -- Sell low dollar value policies (e.g.
$1000/$2000 of face amount)
- Paid for by bank draft of check sent in by mail
Insurance is sold through - Correct Answer -Career agents
Brokers
©COPYRIGHT 2025 ALL RIGHTS RESERVED 3
, Aka Producers (independent insurance agents)
Agent - Correct Answer -- Sells the company's products to the public
- When someone becomes an agent, they become a "field underwriter"
- Develops base for long-term sources of clients by using referrals, occupational,
and special-interest groups to compile lists of prospects.
- Approaches potential clients by utilizing mailings and phone solicitation; making
presentations to groups at company-sponsored gatherings; speaking publicly to
community groups on the subject of financial well-being.
- Determines clients' particular needs and financial situations by scheduling fact-
finding appointments; determining extent of present coverage and investments;
ascertaining long-term goals.
- Develops a coordinated protection plan by calculating and quoting rates for
immediate coverage action and long-term strategy implementation.
- Obtains underwriting approval by completing application for coverage.
- Completes coverage by delivering policy; planning future follow-up visits and
evaluations of needs.
- Provides continuing service by providing direct deposit forms; processing
changes in beneficiary and policy loan applications.
©COPYRIGHT 2025 ALL RIGHTS RESERVED 4
