California Insurance Exam
Questions and Answers Already
Graded A+
Two methods of determining insurance need: - correct answer ✔✔- Human Life Approach
- Needs Approach
Human Life Value Approach~ - correct answer ✔✔- One of two ways of calculating insurance
need.
- By discounting estimated future income
- Calculating the amount of life insurance a family will need based on the financial loss that
they will suffer if the insured person were to pass away today
- 10X salary
- Based on age, gender, planned retirement age, occupation, annual wage, employment
benefits, as well as the personal and financial information of the spouse and/or dependent
children.
*Needs Approach - correct answer ✔✔Ask yourself:
1. How much will be needed at death to meet obligations.
2. How much future income is needed to sustain the household.
- Focuses on the financial needs of the family
- Considers final expenses
- Considers disability income
- Consideres monthly income
Main list of private insurance companies - correct answer ✔✔- Stock insurers
,- Mutual insurers
- Lloyd's of London
- Reinsurers
- Risk retention groups
- Fraternal benefit societies
- Home service insurers
Government supplied insurance - correct answer ✔✔- OASDI (Social Security)
- Medicare
- Medicaid
- Military plans (SGLI & VGLI)
Lloyd's of London - correct answer ✔✔- Take greater risks and charge larger premiums.
- A British insurance and reinsurance marketplace
- Come together to pool and spread risk
Reinsurers - correct answer ✔✔Companies that take part of the risk of insurance companies.
(The company that is taking a part of the risk)
Ceding Company - correct answer ✔✔The company that is transferring the risk
Risk retention group - correct answer ✔✔A mutual company formed to cover a bunch of
people in the same occupation.
Fraternal benefit society - correct answer ✔✔Membership groups that are created for
membership to purchase insurance and gain other benefits.
,Home service insurers - correct answer ✔✔- Sell low dollar value policies (e.g. $1000/$2000
of face amount)
- Paid for by bank draft of check sent in by mail
Insurance is sold through - correct answer ✔✔Career agents
Brokers
Aka Producers (independent insurance agents)
Agent - correct answer ✔✔- Sells the company's products to the public
- When someone becomes an agent, they become a "field underwriter"
- Develops base for long-term sources of clients by using referrals, occupational, and special-
interest groups to compile lists of prospects.
- Approaches potential clients by utilizing mailings and phone solicitation; making
presentations to groups at company-sponsored gatherings; speaking publicly to community
groups on the subject of financial well-being.
- Determines clients' particular needs and financial situations by scheduling fact-finding
appointments; determining extent of present coverage and investments; ascertaining long-
term goals.
- Develops a coordinated protection plan by calculating and quoting rates for immediate
coverage action and long-term strategy implementation.
- Obtains underwriting approval by completing application for coverage.
- Completes coverage by delivering policy; planning future follow-up visits and evaluations of
needs.
- Provides continuing service by providing direct deposit forms; processing changes in
beneficiary and policy loan applications.
- Provides death benefits by delivering policy proceeds; reassessing client needs.
- Updates job knowledge by participating in educational opportunities; reading professional
publications; maintaining personal networks; participating in professional organizations.
- Enhances insurance agency reputation by accepting ownership for accomplishing new and
different requests; exploring opportunities to add value to job accomplishments.
, Brokers - correct answer ✔✔- Represents the people and finds a company to insure them
- Assist prospective insureds with developing risk management strategies appropriate to their
risk profiles.
- *Cannot legally bind insurance
- Represents the client in purchasing the insurance product
*Vending Machines~ - correct answer ✔✔- Direct selling
- (A method of distribution)
- Generally limited to travel accident insurance , supplemental health or disability policies, or
life insurance policies with a small face amount.
*Mass marketing~ - correct answer ✔✔- A client interacts with an agent by phone or e-mail.
Trying to get a number of people at one time to purchase insurance.
- It reaches insureds who generally have no access to their own brokers or agents.
- It also brings the policies to the insureds usually at lower prices than those charged in one-
on-one sales because it reduces the "middleman" cost of agents.
- *Direct response / direct mail.
- A system that does not use an agent
*Paul vs Virginia - correct answer ✔✔State would be in charge of the insurance industry
*US vs SE Underwriters Association - correct answer ✔✔Federal government in charge of the
insurance industry
*McCarran Ferguson Act - correct answer ✔✔Return supervisory power to the states
Questions and Answers Already
Graded A+
Two methods of determining insurance need: - correct answer ✔✔- Human Life Approach
- Needs Approach
Human Life Value Approach~ - correct answer ✔✔- One of two ways of calculating insurance
need.
- By discounting estimated future income
- Calculating the amount of life insurance a family will need based on the financial loss that
they will suffer if the insured person were to pass away today
- 10X salary
- Based on age, gender, planned retirement age, occupation, annual wage, employment
benefits, as well as the personal and financial information of the spouse and/or dependent
children.
*Needs Approach - correct answer ✔✔Ask yourself:
1. How much will be needed at death to meet obligations.
2. How much future income is needed to sustain the household.
- Focuses on the financial needs of the family
- Considers final expenses
- Considers disability income
- Consideres monthly income
Main list of private insurance companies - correct answer ✔✔- Stock insurers
,- Mutual insurers
- Lloyd's of London
- Reinsurers
- Risk retention groups
- Fraternal benefit societies
- Home service insurers
Government supplied insurance - correct answer ✔✔- OASDI (Social Security)
- Medicare
- Medicaid
- Military plans (SGLI & VGLI)
Lloyd's of London - correct answer ✔✔- Take greater risks and charge larger premiums.
- A British insurance and reinsurance marketplace
- Come together to pool and spread risk
Reinsurers - correct answer ✔✔Companies that take part of the risk of insurance companies.
(The company that is taking a part of the risk)
Ceding Company - correct answer ✔✔The company that is transferring the risk
Risk retention group - correct answer ✔✔A mutual company formed to cover a bunch of
people in the same occupation.
Fraternal benefit society - correct answer ✔✔Membership groups that are created for
membership to purchase insurance and gain other benefits.
,Home service insurers - correct answer ✔✔- Sell low dollar value policies (e.g. $1000/$2000
of face amount)
- Paid for by bank draft of check sent in by mail
Insurance is sold through - correct answer ✔✔Career agents
Brokers
Aka Producers (independent insurance agents)
Agent - correct answer ✔✔- Sells the company's products to the public
- When someone becomes an agent, they become a "field underwriter"
- Develops base for long-term sources of clients by using referrals, occupational, and special-
interest groups to compile lists of prospects.
- Approaches potential clients by utilizing mailings and phone solicitation; making
presentations to groups at company-sponsored gatherings; speaking publicly to community
groups on the subject of financial well-being.
- Determines clients' particular needs and financial situations by scheduling fact-finding
appointments; determining extent of present coverage and investments; ascertaining long-
term goals.
- Develops a coordinated protection plan by calculating and quoting rates for immediate
coverage action and long-term strategy implementation.
- Obtains underwriting approval by completing application for coverage.
- Completes coverage by delivering policy; planning future follow-up visits and evaluations of
needs.
- Provides continuing service by providing direct deposit forms; processing changes in
beneficiary and policy loan applications.
- Provides death benefits by delivering policy proceeds; reassessing client needs.
- Updates job knowledge by participating in educational opportunities; reading professional
publications; maintaining personal networks; participating in professional organizations.
- Enhances insurance agency reputation by accepting ownership for accomplishing new and
different requests; exploring opportunities to add value to job accomplishments.
, Brokers - correct answer ✔✔- Represents the people and finds a company to insure them
- Assist prospective insureds with developing risk management strategies appropriate to their
risk profiles.
- *Cannot legally bind insurance
- Represents the client in purchasing the insurance product
*Vending Machines~ - correct answer ✔✔- Direct selling
- (A method of distribution)
- Generally limited to travel accident insurance , supplemental health or disability policies, or
life insurance policies with a small face amount.
*Mass marketing~ - correct answer ✔✔- A client interacts with an agent by phone or e-mail.
Trying to get a number of people at one time to purchase insurance.
- It reaches insureds who generally have no access to their own brokers or agents.
- It also brings the policies to the insureds usually at lower prices than those charged in one-
on-one sales because it reduces the "middleman" cost of agents.
- *Direct response / direct mail.
- A system that does not use an agent
*Paul vs Virginia - correct answer ✔✔State would be in charge of the insurance industry
*US vs SE Underwriters Association - correct answer ✔✔Federal government in charge of the
insurance industry
*McCarran Ferguson Act - correct answer ✔✔Return supervisory power to the states
