CALIFORNIA PSI LIFE AGENT | PRACTICE EXAM BANK
California Life Agent License Exam
PSI Practice Exam Bank
1000 Original Questions with Detailed Rationales
General Insurance • Life Policies • Annuities • Riders • CA Ethics & Code Themes
DISCLAIMER – This is an ORIGINAL educational practice resource aligned with publicly described California Life Agent exam themes. It is NOT an
official CDI or PSI exam, NOT a copy of proprietary test items, and NOT legal advice. Always study the current California License Examination
Objectives, complete required ethics/Code education, and verify rules at insurance.ca.gov before testing.
Section Mapping
Sec Topic Questions N
1 General Insurance – Concepts, Contracts & Marketplace Q1-Q200 200
2 Life Insurance Basics – Term, Permanent & Provisions Q201-Q400 200
3 Annuities & Policy Riders Q401-Q600 200
4 Taxation, Group Life, Underwriting & CA Rules/Ethics Q601-Q800 200
5 Integrated Review – Mixed Life Agent Topics Q801-Q1000 200
TOTAL 1000
Official exam reminder: Life-Only = 75 questions, 105 minutes, 60% to pass (confirm current CDI/PSI specs). Download
License Examination Objectives from insurance.ca.gov.
Original Study Resource | Page 1
, CALIFORNIA PSI LIFE AGENT | PRACTICE EXAM BANK
Section 1: General Insurance – Concepts, Contracts & Marketplace
Q1: Insurance is best described as a mechanism that:
A. Eliminates all risk of loss
B. Transfers the financial risk of loss from an individual to an insurer in exchange for premium
[CORRECT]
C. Guarantees investment profits
D. Is only available to corporations
Correct Answer: B
Rationale: Insurance pools and transfers pure risk.
Q2: A pure risk involves:
A. Only chance of gain
B. Chance of loss or no loss, without chance of financial gain [CORRECT]
C. Only speculative market bets
D. Guaranteed profit
Correct Answer: B
Rationale: Pure risk is insurable; speculative risk generally is not.
Q3: Insurable interest in life insurance must exist:
A. Never
B. At the time of application/policy inception (and under applicable rules) [CORRECT]
C. Only at the moment of death in all cases
D. Only for property insurance
Correct Answer: B
Rationale: Insurable interest is required to prevent wagering on lives.
Original Study Resource | Page 2
, CALIFORNIA PSI LIFE AGENT | PRACTICE EXAM BANK
Q4: Consideration in an insurance contract includes:
A. Only the agent’s commission
B. The applicant’s premium (and statements) and the insurer’s promise to pay covered claims
[CORRECT]
C. Only the policy illustration
D. Nothing of value
Correct Answer: B
Rationale: Both sides exchange consideration.
Q5: A contract of adhesion means:
A. The insured drafts all wording
B. The insurer drafts the contract; ambiguities are often construed against the drafter
[CORRECT]
C. No written policy exists
D. Only oral agreements count
Correct Answer: B
Rationale: Adhesion contracts are offered on a take-it-or-leave-it basis.
Q6: Utmost good faith (uberrimae fidei) requires:
A. Hiding material facts
B. Honest disclosure of material information by the parties [CORRECT]
C. Only the insurer to be honest
D. No applications
Correct Answer: B
Rationale: Material misrepresentation can void coverage.
Original Study Resource | Page 3
, CALIFORNIA PSI LIFE AGENT | PRACTICE EXAM BANK
Q7: An agent’s authority may include:
A. Only personal opinions with no binding effect ever
B. Express, implied, and apparent authority within the agency relationship [CORRECT]
C. Unlimited power to rewrite state law
D. No duty to the insurer
Correct Answer: B
Rationale: Agency law defines binding authority.
Q8: Fiduciary responsibility of an agent includes:
A. Commingling premiums with personal funds freely
B. Handling premiums and client interests with care and honesty [CORRECT]
C. Ignoring disclosure rules
D. Promising coverage the insurer never authorized
Correct Answer: B
Rationale: Agents must safeguard funds and act ethically.
Q9: Adverse selection refers to:
A. Insurers only selecting the healthiest risks always perfectly
B. Tendency of higher-risk individuals to seek insurance more than lower-risk individuals
[CORRECT]
C. Only random claims
D. No underwriting effect
Correct Answer: B
Rationale: Underwriting counters adverse selection.
Original Study Resource | Page 4
California Life Agent License Exam
PSI Practice Exam Bank
1000 Original Questions with Detailed Rationales
General Insurance • Life Policies • Annuities • Riders • CA Ethics & Code Themes
DISCLAIMER – This is an ORIGINAL educational practice resource aligned with publicly described California Life Agent exam themes. It is NOT an
official CDI or PSI exam, NOT a copy of proprietary test items, and NOT legal advice. Always study the current California License Examination
Objectives, complete required ethics/Code education, and verify rules at insurance.ca.gov before testing.
Section Mapping
Sec Topic Questions N
1 General Insurance – Concepts, Contracts & Marketplace Q1-Q200 200
2 Life Insurance Basics – Term, Permanent & Provisions Q201-Q400 200
3 Annuities & Policy Riders Q401-Q600 200
4 Taxation, Group Life, Underwriting & CA Rules/Ethics Q601-Q800 200
5 Integrated Review – Mixed Life Agent Topics Q801-Q1000 200
TOTAL 1000
Official exam reminder: Life-Only = 75 questions, 105 minutes, 60% to pass (confirm current CDI/PSI specs). Download
License Examination Objectives from insurance.ca.gov.
Original Study Resource | Page 1
, CALIFORNIA PSI LIFE AGENT | PRACTICE EXAM BANK
Section 1: General Insurance – Concepts, Contracts & Marketplace
Q1: Insurance is best described as a mechanism that:
A. Eliminates all risk of loss
B. Transfers the financial risk of loss from an individual to an insurer in exchange for premium
[CORRECT]
C. Guarantees investment profits
D. Is only available to corporations
Correct Answer: B
Rationale: Insurance pools and transfers pure risk.
Q2: A pure risk involves:
A. Only chance of gain
B. Chance of loss or no loss, without chance of financial gain [CORRECT]
C. Only speculative market bets
D. Guaranteed profit
Correct Answer: B
Rationale: Pure risk is insurable; speculative risk generally is not.
Q3: Insurable interest in life insurance must exist:
A. Never
B. At the time of application/policy inception (and under applicable rules) [CORRECT]
C. Only at the moment of death in all cases
D. Only for property insurance
Correct Answer: B
Rationale: Insurable interest is required to prevent wagering on lives.
Original Study Resource | Page 2
, CALIFORNIA PSI LIFE AGENT | PRACTICE EXAM BANK
Q4: Consideration in an insurance contract includes:
A. Only the agent’s commission
B. The applicant’s premium (and statements) and the insurer’s promise to pay covered claims
[CORRECT]
C. Only the policy illustration
D. Nothing of value
Correct Answer: B
Rationale: Both sides exchange consideration.
Q5: A contract of adhesion means:
A. The insured drafts all wording
B. The insurer drafts the contract; ambiguities are often construed against the drafter
[CORRECT]
C. No written policy exists
D. Only oral agreements count
Correct Answer: B
Rationale: Adhesion contracts are offered on a take-it-or-leave-it basis.
Q6: Utmost good faith (uberrimae fidei) requires:
A. Hiding material facts
B. Honest disclosure of material information by the parties [CORRECT]
C. Only the insurer to be honest
D. No applications
Correct Answer: B
Rationale: Material misrepresentation can void coverage.
Original Study Resource | Page 3
, CALIFORNIA PSI LIFE AGENT | PRACTICE EXAM BANK
Q7: An agent’s authority may include:
A. Only personal opinions with no binding effect ever
B. Express, implied, and apparent authority within the agency relationship [CORRECT]
C. Unlimited power to rewrite state law
D. No duty to the insurer
Correct Answer: B
Rationale: Agency law defines binding authority.
Q8: Fiduciary responsibility of an agent includes:
A. Commingling premiums with personal funds freely
B. Handling premiums and client interests with care and honesty [CORRECT]
C. Ignoring disclosure rules
D. Promising coverage the insurer never authorized
Correct Answer: B
Rationale: Agents must safeguard funds and act ethically.
Q9: Adverse selection refers to:
A. Insurers only selecting the healthiest risks always perfectly
B. Tendency of higher-risk individuals to seek insurance more than lower-risk individuals
[CORRECT]
C. Only random claims
D. No underwriting effect
Correct Answer: B
Rationale: Underwriting counters adverse selection.
Original Study Resource | Page 4
