California Insurance Exam Questions With
Correct Answers
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
Correct Answers
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
