CALIFORNIA PSI LIFE INSURANCE EXAM III
2026 PRACTICE TEST PREMIUM QUESTIONS
AND ACCURATE ANSWERS ONE HUNDRED
PERCENT CORRECT
◉ Which of the following would not be accomplished with the
purchase of an insurance policy?
Answer: Risk is eliminated
◉ Which of the following is a situation where there is a possibility of
either a loss or gain?
Answer: Speculative risk
◉ Which of the following is any situation that presents the
possibility of a loss?
Answer: Loss
◉ An insurer having a large number of similar exposure units is
considered important because:
Answer: the greater the number insured, the more accurately that is
her can predict losses & set appropriate premiums
,◉ Which of these statements correctly describes risks?
Answer: Pure risk is the only insurable risk
◉ Which type of risk is gambling?
Answer: Speculative risk
◉ Moral hazard is described as the:
Answer: increased chance of a loss because of an insured's dishonest
tendencies
◉ All of the following circumstances must be met for los retention to
be an effective, risk management technique, except
Answer: Probability of loss is unknown
◉ All of the following circumstances must be met for lost attention
to be an effective risk management technique, except
Answer: Probability of loss is unknown
◉ After a policy has lapsed, which provision allows the insurer to
continue coverage
Answer: Reinstatement provision
◉ In a life insurance policy, the entire contract consists of
, Answer: policy and attached application
◉ Which policy provision protects the policy owner from
unintentional lapse of the contract?
Answer: Grace period
◉ Which of the following is not a common life insurance policy
later?
Answer: Extended term
◉ What an accidental death benefit is added to a whole life policy,
how does this affect the policies cash value?
Answer: Policies, cash value is not affected
◉ A life insurance policy can be surrendered for its cash value under
which policy provision?
Answer: Nonforfeiture options
◉ Which of the following does a policy owner not have the right to
change?
Answer: Dividend schedule
◉ Which statement is true regarding policy dividends?
2026 PRACTICE TEST PREMIUM QUESTIONS
AND ACCURATE ANSWERS ONE HUNDRED
PERCENT CORRECT
◉ Which of the following would not be accomplished with the
purchase of an insurance policy?
Answer: Risk is eliminated
◉ Which of the following is a situation where there is a possibility of
either a loss or gain?
Answer: Speculative risk
◉ Which of the following is any situation that presents the
possibility of a loss?
Answer: Loss
◉ An insurer having a large number of similar exposure units is
considered important because:
Answer: the greater the number insured, the more accurately that is
her can predict losses & set appropriate premiums
,◉ Which of these statements correctly describes risks?
Answer: Pure risk is the only insurable risk
◉ Which type of risk is gambling?
Answer: Speculative risk
◉ Moral hazard is described as the:
Answer: increased chance of a loss because of an insured's dishonest
tendencies
◉ All of the following circumstances must be met for los retention to
be an effective, risk management technique, except
Answer: Probability of loss is unknown
◉ All of the following circumstances must be met for lost attention
to be an effective risk management technique, except
Answer: Probability of loss is unknown
◉ After a policy has lapsed, which provision allows the insurer to
continue coverage
Answer: Reinstatement provision
◉ In a life insurance policy, the entire contract consists of
, Answer: policy and attached application
◉ Which policy provision protects the policy owner from
unintentional lapse of the contract?
Answer: Grace period
◉ Which of the following is not a common life insurance policy
later?
Answer: Extended term
◉ What an accidental death benefit is added to a whole life policy,
how does this affect the policies cash value?
Answer: Policies, cash value is not affected
◉ A life insurance policy can be surrendered for its cash value under
which policy provision?
Answer: Nonforfeiture options
◉ Which of the following does a policy owner not have the right to
change?
Answer: Dividend schedule
◉ Which statement is true regarding policy dividends?
