CA PSI Site - Life, Accident and Health
Agent Examination (Life Agent)
Question & Answers 2025
Admitted Insurance Company vs. Non-Admitted Insurance
Company - CORRECT ANSWERS ✔✔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 ANSWERS
✔✔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 ANSWERS ✔✔One
party writes the contract without inout from the other
party on a "take-it-or-leave-it" basis
,CA PSI Site - Life, Accident and Health
Agent Examination (Life Agent)
Question & Answers 2025
Aleatory Contract - CORRECT ANSWERS ✔✔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 ANSWERS ✔✔An
agreement to pay on behalf of another party under
specified circumstances
Unilateral Contract - CORRECT ANSWERS ✔✔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 - CORRECT ANSWERS
✔✔1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
,CA PSI Site - Life, Accident and Health
Agent Examination (Life Agent)
Question & Answers 2025
4) Consideration
Preferred Risks vs Standard Risks - CORRECT ANSWERS
✔✔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 ANSWERS ✔✔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
, CA PSI Site - Life, Accident and Health
Agent Examination (Life Agent)
Question & Answers 2025
- 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:
- 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 ANSWERS ✔✔Life
Insurance Disability Rider
Agent Examination (Life Agent)
Question & Answers 2025
Admitted Insurance Company vs. Non-Admitted Insurance
Company - CORRECT ANSWERS ✔✔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 ANSWERS
✔✔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 ANSWERS ✔✔One
party writes the contract without inout from the other
party on a "take-it-or-leave-it" basis
,CA PSI Site - Life, Accident and Health
Agent Examination (Life Agent)
Question & Answers 2025
Aleatory Contract - CORRECT ANSWERS ✔✔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 ANSWERS ✔✔An
agreement to pay on behalf of another party under
specified circumstances
Unilateral Contract - CORRECT ANSWERS ✔✔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 - CORRECT ANSWERS
✔✔1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
,CA PSI Site - Life, Accident and Health
Agent Examination (Life Agent)
Question & Answers 2025
4) Consideration
Preferred Risks vs Standard Risks - CORRECT ANSWERS
✔✔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 ANSWERS ✔✔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
, CA PSI Site - Life, Accident and Health
Agent Examination (Life Agent)
Question & Answers 2025
- 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:
- 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 ANSWERS ✔✔Life
Insurance Disability Rider
