CA LIFE AND HEALTH INSURANCE EXAM 3 QUESTIONS AND
ANSWERS (VERIFIED AND WELL DETAILED ANSWERS) LATEST
UPDATE 2025/2026(CONTAINS THREE VERSIONS A, B&C)
As authorized by the California Insurance Code, the Insurance Commissioner has
provided standards for names used by life insurance agents. Under these standards
which, if any, of the following are automatically acceptable for Mary Brown, a
holder of the CLU designation? - CORRECT ANSWER-Mary Brown Insurance
Services.
When must insurance records of insurance agents and brokers be made available to
the Insurance Commissioner? - CORRECT ANSWER-At all times.
Any situation that presents the possibility of a loss is known as - CORRECT
ANSWER-a loss exposure
Which of the following information is not required to be communicated in a Life
insurance contract? - CORRECT ANSWER-Personal judgment.
The direct distribution of insurance utilizes all of the following to promote the sale
of insurance EXCEPT - CORRECT ANSWER-telephone call from an agent.
A contract in which one party promises to indemnify another against loss that
arises from an unknown event is - CORRECT ANSWER-an insurance policy.
,All of the occurrences listed below are examples of an insurable event as defined
by the California Insurance Code EXCEPT - CORRECT ANSWER-an insured
suffers a financial loss in the state lottery
What is meant by referring to an insurance policy as a unilateral contract? -
CORRECT ANSWER-Only one party makes a legally enforceable promise.
All of the following statements about aleatory contracts are true EXCEPT -
CORRECT ANSWER-the insured and insurer contribute equally to the contract.
All of the following would be considered unfair trade practices EXCEPT -
CORRECT ANSWER-committing any act of discrimination whether it be
deemed fair or unfair.
A contract of indemnity is one in which - CORRECT ANSWER-one party is
restored to the same financial position the party was in before the loss occurred.
In insurance terminology, "indemnity" means - CORRECT ANSWER-make
whole.
As defined in the California insurance Code, "insurance" is a - CORRECT
ANSWER-contract.
What would a person be guilty of who refuses to deliver any books, records, or
assets to the commissioner once a seizure order has been executed? - CORRECT
ANSWER-A misdemeanor
,An agent who is acting as an insurance agent, broker, solicitor, life agent, accident
and health, or bail agent acts in which capacity when handling premiums or return
premiums for an insured? - CORRECT ANSWER-Fiduciary
Which of the following statements regarding risk is TRUE? - CORRECT
ANSWER-Only pure risks are insurable.
The purchase of an insurance policy may accomplish all of the following for the
insured EXCEPT - CORRECT ANSWER-the elimination of risk.
Insureds are entitled to recover an amount NOT greater than the amount of their
loss under the principle of - CORRECT ANSWER-indemnity.
What rule is used to determine the importance of a representation? - CORRECT
ANSWER-The materiality of concealment.
The required contents of a policy include all of the following EXCEPT -
CORRECT ANSWER-the probability of loss
All of the following are characteristics of reinsurance EXCEPT it - CORRECT
ANSWER-increases the unearned premium reserve.
According to the California Insurance Code, an insurance policy must specify all
of the following EXCEPT the - CORRECT ANSWER-financial rating of the
insurer.
, All of the following qualify as "background information" as defined in Section
1729.2 of the California Insurance Code, EXCEPT - CORRECT ANSWER-
misdemeanor charges filed, not resulting in a conviction.
Loss retention is an effective risk management technique when all of the following
conditions exist EXCEPT the - CORRECT ANSWER-probability of loss is
unknown.
A situation in which there is a possibility of loss or a gain is a - CORRECT
ANSWER-speculative risk.
Why is having a large number of similar exposure units important to insurers? -
CORRECT ANSWER-The greater the number insured, the more accurately the
insurer can predict losses and set appropriate premiums.
All of the following are benefits of insurance EXCEPT it - CORRECT
ANSWER-eliminates fraudulent losses.
Who are members of the Medical information Bureau? - CORRECT ANSWER-
Life and health insurers.
The process by which an insurer decides whether to issue requested insurance is
called - CORRECT ANSWER-underwriting.
Unless it is merely a statement of an expectation or belief, a representation as to
the future is considered which of the following? - CORRECT ANSWER-Promise
ANSWERS (VERIFIED AND WELL DETAILED ANSWERS) LATEST
UPDATE 2025/2026(CONTAINS THREE VERSIONS A, B&C)
As authorized by the California Insurance Code, the Insurance Commissioner has
provided standards for names used by life insurance agents. Under these standards
which, if any, of the following are automatically acceptable for Mary Brown, a
holder of the CLU designation? - CORRECT ANSWER-Mary Brown Insurance
Services.
When must insurance records of insurance agents and brokers be made available to
the Insurance Commissioner? - CORRECT ANSWER-At all times.
Any situation that presents the possibility of a loss is known as - CORRECT
ANSWER-a loss exposure
Which of the following information is not required to be communicated in a Life
insurance contract? - CORRECT ANSWER-Personal judgment.
The direct distribution of insurance utilizes all of the following to promote the sale
of insurance EXCEPT - CORRECT ANSWER-telephone call from an agent.
A contract in which one party promises to indemnify another against loss that
arises from an unknown event is - CORRECT ANSWER-an insurance policy.
,All of the occurrences listed below are examples of an insurable event as defined
by the California Insurance Code EXCEPT - CORRECT ANSWER-an insured
suffers a financial loss in the state lottery
What is meant by referring to an insurance policy as a unilateral contract? -
CORRECT ANSWER-Only one party makes a legally enforceable promise.
All of the following statements about aleatory contracts are true EXCEPT -
CORRECT ANSWER-the insured and insurer contribute equally to the contract.
All of the following would be considered unfair trade practices EXCEPT -
CORRECT ANSWER-committing any act of discrimination whether it be
deemed fair or unfair.
A contract of indemnity is one in which - CORRECT ANSWER-one party is
restored to the same financial position the party was in before the loss occurred.
In insurance terminology, "indemnity" means - CORRECT ANSWER-make
whole.
As defined in the California insurance Code, "insurance" is a - CORRECT
ANSWER-contract.
What would a person be guilty of who refuses to deliver any books, records, or
assets to the commissioner once a seizure order has been executed? - CORRECT
ANSWER-A misdemeanor
,An agent who is acting as an insurance agent, broker, solicitor, life agent, accident
and health, or bail agent acts in which capacity when handling premiums or return
premiums for an insured? - CORRECT ANSWER-Fiduciary
Which of the following statements regarding risk is TRUE? - CORRECT
ANSWER-Only pure risks are insurable.
The purchase of an insurance policy may accomplish all of the following for the
insured EXCEPT - CORRECT ANSWER-the elimination of risk.
Insureds are entitled to recover an amount NOT greater than the amount of their
loss under the principle of - CORRECT ANSWER-indemnity.
What rule is used to determine the importance of a representation? - CORRECT
ANSWER-The materiality of concealment.
The required contents of a policy include all of the following EXCEPT -
CORRECT ANSWER-the probability of loss
All of the following are characteristics of reinsurance EXCEPT it - CORRECT
ANSWER-increases the unearned premium reserve.
According to the California Insurance Code, an insurance policy must specify all
of the following EXCEPT the - CORRECT ANSWER-financial rating of the
insurer.
, All of the following qualify as "background information" as defined in Section
1729.2 of the California Insurance Code, EXCEPT - CORRECT ANSWER-
misdemeanor charges filed, not resulting in a conviction.
Loss retention is an effective risk management technique when all of the following
conditions exist EXCEPT the - CORRECT ANSWER-probability of loss is
unknown.
A situation in which there is a possibility of loss or a gain is a - CORRECT
ANSWER-speculative risk.
Why is having a large number of similar exposure units important to insurers? -
CORRECT ANSWER-The greater the number insured, the more accurately the
insurer can predict losses and set appropriate premiums.
All of the following are benefits of insurance EXCEPT it - CORRECT
ANSWER-eliminates fraudulent losses.
Who are members of the Medical information Bureau? - CORRECT ANSWER-
Life and health insurers.
The process by which an insurer decides whether to issue requested insurance is
called - CORRECT ANSWER-underwriting.
Unless it is merely a statement of an expectation or belief, a representation as to
the future is considered which of the following? - CORRECT ANSWER-Promise
