CALIFORNIA INSURANCE EXAM

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CALIFORNIA INSURANCE EXAM

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: Special Situation Whole Life Insurance Policies:

Answer:

• Family Plans Policies
• Multiple Protection Policies
• Joint Life Policies
• Juvenile Insurance
• Credit Life Insurance

Question 2: Industrial Insurance

Answer:

• Aka "home service, debit, burial policy"
• Purchased and issued in low dollar amounts
• Frequent premium payments
• If an insured wants to convert several industrial life policies to a single ordinary life policy, the

combined face value of the industrial life policies must be $3000

Question 3: Government supplied insurance

Answer:

• OASDI (Social Security)
• Medicare
• Medicaid
• Military plans (SGLI & VGLI)

Question 4: What title as a financial advisor is legally acceptable to use?

Answer:

...

Question 5: Lloyd's of London

Answer:

• Take greater risks and charge larger premiums.
• A British insurance and reinsurance marketplace
• Come together to pool and spread risk

Question 6: Hazard

Answer:

• What causes the incident to happen. (e.g. your thoughts, actions, habits?)
• 3 types

Question 7: Characteristics of insurance contracts:

Answer:

• Aleatory: the money being put in compared to the benefits received does not work out equally
• Adhesion: states have approved all insurance policies and contracts. Therefore, no negotiations on

policies

• Unilateral: one of the two parties are stuck. which is the insurance company. Client can get out when

they wish.

• Not a personal contract: can change the ownership of the policy. The owner is the one paying for it

which is different from the "insured person"

• Conditional: payment must be made to continue and company must pay if insured dies

Question 8: Estoppel

Answer:

• What someone or a company is prevented from doing because of the waiver.
• (e.g. the company waives the right to collect premium if client becomes ill. The company is estopped

from collecting)

Question 9: Reentry Method Term Life Insurance

Answer:

• Coverage is guaranteed
• Assess the insured's health at the time of renewal to determine amount of premium to pay

Question 10: *Fair Credit Reporting Act

Answer:

• Provides that the applicant for insurance be informed that a consumer report may be requested
• A federal provision that requires privacy of a client's information
• Designed to promote accuracy, fairness, and privacy of information in the files of every "consumer

reporting agency"

• You must be told if information in your file has been used against you.
• You can find out what is in your file.
• You can dispute inaccurate information with the CRA.
• Inaccurate information must be corrected or deleted.
• You can dispute inaccurate items with the source of the information.
• It is not required that the CRA name be disclosed if you are denied coverage
• Outdated information may not be reported.
• Access to your file is limited.
• Your consent is required for reports that are provided to employers, or reports that contain medical

information.

• You may choose to exclude your name from CRA lists for unsolicited credit and insurance offers.
• You may seek damages from violators.

Question 11: Void

Answer:

Something never happened. (e.g. making the policy invalid)

Question 12: 4 Treatments of Risk

Answer:

• Avoidance
• Reduction
• Retention
• Transference

Question 13: Waiver

Answer:

The giving up of a right. (e.g. signing a waiver that you won't sue)

Question 14: *Risk Retention

Answer:

Doing nothing and retaining all the risk without any outside assistance.

• "Self insuring" or retaining only a portion of the risk through paying deductibles

Question 15: 3 Ways Whole Life Insurance is paid (time-wise):

Answer:

• Straight Whole Life
• Limited Pay Whole Life
• Single Premium Whole Life

Question 16: Level Term Life Insurance~

Answer:

-

Question 17: *Annually Renewable Term (ART) Term Life Insurance

Answer:

• Premium increases year by year based on mortality costs
• Coverage is guaranteed

Question 18: *McCarran Ferguson Act

Answer:

Return supervisory power to the states

Question 19: Indexed Whole Life

Answer:

• Connected to the Consumer Price Index (government figure generated monthly indicating inflation.

The face amount gradually rises as inflation increases)

Question 20: *Morale Hazard

Answer:

• Focus on hobbies and jobs
• Jump out of airplanes?
• Attitude towards the item insured and to act carelessly about it

Question 21: *Credit Life Insurance

Answer:

• Policy used to cover a financial debt.
• An individual policy covering an individual's death