Page 1 of 18
CA-LIFE PSI EXAM WITH 100% CORRECT AND VERIFIED
ANSWERS
Which of the following is a contract that involves one party which indemnifies
another one a loss arises from an unknown event?
Insurance policy
A participating company is also referred to as which type of insurer?
Mutual insurer
An insurer owned by its policyholders, is called a
Mutual insurer
What is a participating life insurance policy?
Contract that allows the policyowner to receive a share of surplus in the form of
policy dividends
An insurer enter into a contract with a third-party to ensure itself against losses
from insurance policies it issues. What is this agreement called?
Reinsurance
John owns an insurance company that gives him the right to share and then
sure surplus. What kind of policy is this?
Participating
Which of the following is not a characteristic of reinsurance?
Increases the unearned premium reserved
Which of the following is not a benefit of insurance?
Losses due to fraud are eliminated
When a mutual insurer becomes a stock company, the process is called
, Page 2 of 18
Demutualization
Which of the following is an insurer established by a parent company's loss
exposure's?
Captive insurers
Which of the following is not considered to be a definition for the term "loss"?
Probability that an event will occur
Which of the following is not considered a definition of a risk?
The cause of loss
Which of the following best describes the statement; " the more times, and event
is repeated, the more predictable the outcome becomes"?
Law of large numbers
Which of the following would not be accomplished with the purchase of an
insurance policy?
Risk is eliminated
Which of the following is a situation where there is a possibility of either a loss or
gain?
Speculative risk
Which of the following is any situation that presents the possibility of a loss?
Loss
An insurer having a large number of similar exposure units is considered
important because:
the greater the number insured, the more accurately that is her can predict
losses & set appropriate premiums
Which of these statements correctly describes risks?
, Page 3 of 18
Pure risk is the only insurable risk
Which type of risk is gambling?
Speculative risk
Moral hazard is described as the:
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
Probability of loss is unknown
All of the following circumstances must be met for lost attention to be an
effective risk management technique, except
Probability of loss is unknown
After a policy has lapsed, which provision allows the insurer to continue
coverage
Reinstatement provision
In a life insurance policy, the entire contract consists of
policy and attached application
Which policy provision protects the policy owner from unintentional lapse of the
contract?
Grace period
Which of the following is not a common life insurance policy later?
Extended term
What an accidental death benefit is added to a whole life policy, how does this
affect the policies cash value?
Policies, cash value is not affected
CA-LIFE PSI EXAM WITH 100% CORRECT AND VERIFIED
ANSWERS
Which of the following is a contract that involves one party which indemnifies
another one a loss arises from an unknown event?
Insurance policy
A participating company is also referred to as which type of insurer?
Mutual insurer
An insurer owned by its policyholders, is called a
Mutual insurer
What is a participating life insurance policy?
Contract that allows the policyowner to receive a share of surplus in the form of
policy dividends
An insurer enter into a contract with a third-party to ensure itself against losses
from insurance policies it issues. What is this agreement called?
Reinsurance
John owns an insurance company that gives him the right to share and then
sure surplus. What kind of policy is this?
Participating
Which of the following is not a characteristic of reinsurance?
Increases the unearned premium reserved
Which of the following is not a benefit of insurance?
Losses due to fraud are eliminated
When a mutual insurer becomes a stock company, the process is called
, Page 2 of 18
Demutualization
Which of the following is an insurer established by a parent company's loss
exposure's?
Captive insurers
Which of the following is not considered to be a definition for the term "loss"?
Probability that an event will occur
Which of the following is not considered a definition of a risk?
The cause of loss
Which of the following best describes the statement; " the more times, and event
is repeated, the more predictable the outcome becomes"?
Law of large numbers
Which of the following would not be accomplished with the purchase of an
insurance policy?
Risk is eliminated
Which of the following is a situation where there is a possibility of either a loss or
gain?
Speculative risk
Which of the following is any situation that presents the possibility of a loss?
Loss
An insurer having a large number of similar exposure units is considered
important because:
the greater the number insured, the more accurately that is her can predict
losses & set appropriate premiums
Which of these statements correctly describes risks?
, Page 3 of 18
Pure risk is the only insurable risk
Which type of risk is gambling?
Speculative risk
Moral hazard is described as the:
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
Probability of loss is unknown
All of the following circumstances must be met for lost attention to be an
effective risk management technique, except
Probability of loss is unknown
After a policy has lapsed, which provision allows the insurer to continue
coverage
Reinstatement provision
In a life insurance policy, the entire contract consists of
policy and attached application
Which policy provision protects the policy owner from unintentional lapse of the
contract?
Grace period
Which of the following is not a common life insurance policy later?
Extended term
What an accidental death benefit is added to a whole life policy, how does this
affect the policies cash value?
Policies, cash value is not affected
