CA PSI SITE - LIFE, ACCIDENT AND HEALTH AGENT
EXAM | latest update 2025/26|COMPREHENSIVE
QUESTIONS AND VERIFIED ANSWERS (100% Correct
solutions)
Admitted Insurance Company vs. Non-Admitted Insurance Company -CORRECT
ANSWER 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 ANSWER 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 ANSWER One party writes the contract without inout
from the other party on a "take-it-or-leave-it" basis
,Aleatory Contract -CORRECT ANSWER 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 ANSWER An agreement to pay on behalf of another
party under specified circumstances
Unilateral Contract -CORRECT ANSWER 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 ANSWER 1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
4) Consideration
Preferred Risks vs Standard Risks -CORRECT ANSWER 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 ANSWER
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
- 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 ANSWER Life Insurance Disability Rider
If the insured becomes totally disabled, the insurer will waive premiums for the duration
of the disability or the end of the policy, whichever occurs first.
To qualify for the waiver, the insured must be disabled for a waiting period of 3-6
months.
The policyowner must continue to pay premiums during the waiting period, but once
eligible, the waiver is retroactive to the start of the disability and the premiums will be
refunded.
During the disability, the insured will credit the premiums to the policy and all benefits,
such as cash value accumulation and dividend payments, will continue.
Disability Income Rider -CORRECT ANSWER Life Insurance Disability Rider
In the event of total disability and after the initial waiting period (such as 6 months),
premiums are waived and the insured is paid a monthly income.
EXAM | latest update 2025/26|COMPREHENSIVE
QUESTIONS AND VERIFIED ANSWERS (100% Correct
solutions)
Admitted Insurance Company vs. Non-Admitted Insurance Company -CORRECT
ANSWER 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 ANSWER 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 ANSWER One party writes the contract without inout
from the other party on a "take-it-or-leave-it" basis
,Aleatory Contract -CORRECT ANSWER 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 ANSWER An agreement to pay on behalf of another
party under specified circumstances
Unilateral Contract -CORRECT ANSWER 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 ANSWER 1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
4) Consideration
Preferred Risks vs Standard Risks -CORRECT ANSWER 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 ANSWER
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
- 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 ANSWER Life Insurance Disability Rider
If the insured becomes totally disabled, the insurer will waive premiums for the duration
of the disability or the end of the policy, whichever occurs first.
To qualify for the waiver, the insured must be disabled for a waiting period of 3-6
months.
The policyowner must continue to pay premiums during the waiting period, but once
eligible, the waiver is retroactive to the start of the disability and the premiums will be
refunded.
During the disability, the insured will credit the premiums to the policy and all benefits,
such as cash value accumulation and dividend payments, will continue.
Disability Income Rider -CORRECT ANSWER Life Insurance Disability Rider
In the event of total disability and after the initial waiting period (such as 6 months),
premiums are waived and the insured is paid a monthly income.
