CA LIFE EXAM - PSI Exam Questions
Answered Correctly (157Qs) 2026 update
A participating company is also referred to as which type of insurer? - CORRECT ANSWERS
Mutual insurer
An insurer owned by its policyholders, is called a - CORRECT ANSWERS Mutual insurer
What is a participating life insurance policy? - CORRECT ANSWERS 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? - CORRECT ANSWERS Reinsurance
John owns an insurance company that gives him the right to share and then sure surplus. What kind of
policy is this? - CORRECT ANSWERS Participating
Which of the following is not a characteristic of reinsurance? - CORRECT ANSWERS Increases
the unearned premium reserved
Which of the following is not a benefit of insurance? - CORRECT ANSWERS Losses due to
fraud are eliminated
When a mutual insurer becomes a stock company, the process is called - CORRECT ANSWERS
Demutualization
Which of the following is a contract that involves one party which indemnifies another one a loss arises
from an unknown event? - CORRECT ANSWERS Insurance policy
,Which of the following is an insurer established by a parent company's loss exposure's? - CORRECT
ANSWERS Captive insurers
Which of the following is not considered to be a definition for the term "loss"? - CORRECT ANSWERS
Probability that an event will occur
Which of the following is not considered a definition of a risk? - CORRECT ANSWERS 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"? - CORRECT ANSWERS Law of large numbers
Which of the following would not be accomplished with the purchase of an insurance policy? - CORRECT
ANSWERS Risk is eliminated
Which of the following is a situation where there is a possibility of either a loss or gain? - CORRECT
ANSWERS Speculative risk
Which of the following is any situation that presents the possibility of a loss? - CORRECT ANSWERS
Loss
An insurer having a large number of similar exposure units is considered important because: - CORRECT
ANSWERS the greater the number insured, the more accurately that is her can predict losses
& set appropriate premiums
Which of these statements correctly describes risks? - CORRECT ANSWERS Pure risk is the
only insurable risk
, Which type of risk is gambling? - CORRECT ANSWERS Speculative risk
Moral hazard is described as the: - CORRECT ANSWERS 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 - CORRECT ANSWERS Probability of loss is unknown
All of the following circumstances must be met for lost attention to be an effective risk management
technique, except - CORRECT ANSWERS Probability of loss is unknown
After a policy has lapsed, which provision allows the insurer to continue coverage - CORRECT ANSWERS
Reinstatement provision
In a life insurance policy, the entire contract consists of - CORRECT ANSWERS policy and
attached application
Which policy provision protects the policy owner from unintentional lapse of the contract? - CORRECT
ANSWERS Grace period
Which of the following is not a common life insurance policy later? - CORRECT ANSWERS
Extended term
What an accidental death benefit is added to a whole life policy, how does this affect the policies cash
value? - CORRECT ANSWERS Policies, cash value is not affected
A life insurance policy can be surrendered for its cash value under which policy provision? - CORRECT
ANSWERS Nonforfeiture options
Answered Correctly (157Qs) 2026 update
A participating company is also referred to as which type of insurer? - CORRECT ANSWERS
Mutual insurer
An insurer owned by its policyholders, is called a - CORRECT ANSWERS Mutual insurer
What is a participating life insurance policy? - CORRECT ANSWERS 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? - CORRECT ANSWERS Reinsurance
John owns an insurance company that gives him the right to share and then sure surplus. What kind of
policy is this? - CORRECT ANSWERS Participating
Which of the following is not a characteristic of reinsurance? - CORRECT ANSWERS Increases
the unearned premium reserved
Which of the following is not a benefit of insurance? - CORRECT ANSWERS Losses due to
fraud are eliminated
When a mutual insurer becomes a stock company, the process is called - CORRECT ANSWERS
Demutualization
Which of the following is a contract that involves one party which indemnifies another one a loss arises
from an unknown event? - CORRECT ANSWERS Insurance policy
,Which of the following is an insurer established by a parent company's loss exposure's? - CORRECT
ANSWERS Captive insurers
Which of the following is not considered to be a definition for the term "loss"? - CORRECT ANSWERS
Probability that an event will occur
Which of the following is not considered a definition of a risk? - CORRECT ANSWERS 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"? - CORRECT ANSWERS Law of large numbers
Which of the following would not be accomplished with the purchase of an insurance policy? - CORRECT
ANSWERS Risk is eliminated
Which of the following is a situation where there is a possibility of either a loss or gain? - CORRECT
ANSWERS Speculative risk
Which of the following is any situation that presents the possibility of a loss? - CORRECT ANSWERS
Loss
An insurer having a large number of similar exposure units is considered important because: - CORRECT
ANSWERS the greater the number insured, the more accurately that is her can predict losses
& set appropriate premiums
Which of these statements correctly describes risks? - CORRECT ANSWERS Pure risk is the
only insurable risk
, Which type of risk is gambling? - CORRECT ANSWERS Speculative risk
Moral hazard is described as the: - CORRECT ANSWERS 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 - CORRECT ANSWERS Probability of loss is unknown
All of the following circumstances must be met for lost attention to be an effective risk management
technique, except - CORRECT ANSWERS Probability of loss is unknown
After a policy has lapsed, which provision allows the insurer to continue coverage - CORRECT ANSWERS
Reinstatement provision
In a life insurance policy, the entire contract consists of - CORRECT ANSWERS policy and
attached application
Which policy provision protects the policy owner from unintentional lapse of the contract? - CORRECT
ANSWERS Grace period
Which of the following is not a common life insurance policy later? - CORRECT ANSWERS
Extended term
What an accidental death benefit is added to a whole life policy, how does this affect the policies cash
value? - CORRECT ANSWERS Policies, cash value is not affected
A life insurance policy can be surrendered for its cash value under which policy provision? - CORRECT
ANSWERS Nonforfeiture options
