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CA PSI Site - Life, Accident And Health Agent
Examination (Life Agent) Questions And Answers
Download To Pass!!!!!
Quiz :Admitted Insurance Company vs
...
Speculative Risk - Answer :Pure risks are insurable but
Speculative risks are not
Pure Risks - A possibility of loss, no loss, or gain
Pure Risk - A possibility of loss or no loss; there is no possibility for gain
Quiz :Contract of Adhesion - Answer :One party writes the contract without
inout from the other party on a "take-it-or-leave-it" basis
Quiz :Aleatory Contract - Answer :The exchange of value is unequal
...

Quiz :Indemnity Contract - Answer :An agreement to pay on behalf of another
party under specified circumstances
Quiz :Unilateral Contract - Answer :Only one party is legally bound to the
contractual obligations after the premium is paid to the insurer
Only the insurer makes a promise of future performance, and only the insurer
can be charged with breach of contract
Quiz :4 elements of a valid contract - Answer :1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)

4) Consideration
Quiz :Preferred Risks vs Standard Risks - Answer :Standard Risks are
individuals who have the same health, habits, sex/gender, and occupational
characteristics as those reflected in the mortality table
Preferred Risks are individuals who meet certain requirements and qualify for
lower premiums because of ideal health, height and weight
...
Needs Analysis Approach - Answer
:Human Life Value approach is a measure of the projected future earnings and
services of a person at risk in the event of a premature death
...

It always assumes the death of the individual to be immediate and factors the
following steps into arriving at the proper amount of coverage needed:
- Calculate all financial needs caused by immediate death, including debts,
medical bills, and final expenses
- Provide lifetime income to the spouse
- Pay off mortgage or other debts
- Provide funds for children's education
- Subtracts any assets available to fund financial needs after death (such as
retirement plan, other insurance, liquid investments, separate savings)
Quiz :Waiver of Premium - Answer :Life Insurance Disability Rider
If the insured becomes totally disabled, the insurer will waive premiums for the
duration of the disability or the end of the policy, whichever occurs first
...

The policyowner must continue to pay premiums during the waiting period,
but once eligible, the waiver is retroactive to the start of the disability and the
premiums will be refunded
...

Quiz :Disability Income Rider - Answer :Life Insurance Disability Rider
In the event of total disability and after the initial waiting period (such as 6
months), premiums are waived and the insured is paid a monthly income
...

The benefit paid from the rider does not reduce the death benefits paid out
upon death
...

The benefit is payable only if death occurs before a specific age and within 90
days of the accident
Quiz :Separate Account (Variable) vs General Account (Life Insurance) Answer :The separate account is invested in debt or equity securities as
offered by the insurance company
...

o There is no guaranteed minimum return on the cash value in the separate
account and the policy may lose both cash value and death benefit if there are
market losses
...


The general account provides a fixed rate of interest and the cash value in the
general account provides for a guaranteed minimum death benefit
...

Quiz :Principle of Indemnity - Answer :To indemnify means to restore a
person, in whole or in part, to the same physical or financial condition which
existed prior to a loss, but without profit or gain
...

o Instead, indemnity takes the form of cash (a death or disability income
benefit) or payments to physicians or hospitals for care and services provided
to an insured who is injured or ill
...

• The death benefit is paid upon the first insured to die and the policy
terminates
...

Quiz :Family Policies - Answer :To this base life insurance policy, a term
insurance rider is attached that is designed to provide a monthly income to the
survivor if the insured dies during the specified term
...

Quiz :Contributory Plan - Answer :A type of group insurance plan where
employees pay 100% of premium payments and at least 75% of employees
participate in this policy
...


o The partial surrender is actually paid from the policy value and reduces both
the amount of the death benefit and the amount of cash value in the policy
...

• The grace period in California is 60 days
...

Quiz :Free Look - Answer :Every policy of individual life insurance and
annuities (other than variable contracts) that is used for delivery in California
must contain a notice regarding a return of the policy for cancellation of 10-30
days after its receipt by the owner
...

o Persons who are age 60 or older must be given a 30-day free look period
...

Quiz :Cease and Desist order - Answer :Given when unlicensed persons are
caught transacting insurance without appropriate licensing, and penalties can
be up to $5,000 a day
...
Deferred Annuity - Answer :Immediate Annuity: Annuity
that does not have an accumulation period and is used to generate immediate
income within a year of the issue date
...

Deferred annuities are ideal for accumulating a retirement fund
...

Upon the death of the first annuitant, survivor benefits continue, either paying
the full amount of reduced to 2/3 or ½ for the survivor's income until the
survivor dies
...

o Upon death of the first annuitant, the benefit stops
...

Quiz :Limit of Liability - Answer :Also known as the face amount
it is the death benefit payable or coverage provided on a life insurance policy
...

Quiz :Health Maintenance Organization (HMO) - Answer :An Health
Maintenance Organization (HMO) is regarded as a managed health care system
providing a comprehensive array of medical services on a prepaid basis, which
means little or no out of pocket expenses
...
Copayments
discourage unnecessary use of medical resources, such as emergency room
services for non-emergency care
...

Services include usual physician, hospitalization, prescription drugs, laboratory,
x-ray, urgent care
...

Quiz :Preferred Provider Organizations (PPO) - Answer :An Preferred Provider
Organizations (PPO) is an arrangement under which a selected group of
independent hospitals and medical practitioners become preferred providers
in a geographic area
...

o The contracting agency or organizer of a PPO might be a commercial
insurance company, Blue Cross/Blue Shield, local group of hospitals or
physicians, an HMO, large employers, or trade unions
...

Quiz :Exclusive Provider Organization (EPO) - Answer :An EPO is a type of PPO
that REQUIRES a subscriber to seek treatment from a limited number of
network providers
...

Quiz :Social Security Blackout Period - Answer :The time between when the
youngest child reaches age 16 and the spouse is eligible for retirement benefits
at age 60
...

• Morbidity tables are used to provide statistics that give the company a basic
estimate of how many insureds might be expected to suffer an illness or injury
in any year
...


o A fully insured worker has permanent coverage under Social Security and
cannot lose this status
...

Spousal retirement at age 62 or older
...

• The elimination period is a waiting period after a loss occurs before the
benefit period begins
...

Quiz :Medi-cal - Answer :• Medi-Cal is the name of the Medicaid program in
California that provides health coverage to people with low-income and asset
levels who meet eligibility requirements
...

o Benefits: Medi-Cal pays for "medically necessary" health care including"
physician visits, hospital and nursing home care, home health care, laboratory
and x-ray services, prescriptions, medical equipment, ambulance services,
eyeglasses, prenatal care, preventive care, and hospice
...

Quiz :Adult Day Health Care - Answer :A LTC coverage designed to provide
custodial care and supervision on a day care basis outside the home for
individuals not requiring 24-hour confinement in a nursing home nut who
continue to live at home
...

May be provided in a nursing home or in one's own home
...

Hospice care also includes a family counseling benefit
...

Most policies will include benefits for temporary institutionalization of the
insured during a period of respite
...

Quiz :Assume two people apply for life insurance with exactly the same
monthly premiums
...
Both are standard risks with no difference in
their age or health rating
...


C
...

D
...
the owner purchases "accumulation units"
...
- Answer :Variable
Quiz :According to the terms of the suicide clause found in a life insurance
policy, if an insured commits suicide 6 months after the policy is issued, what
will the insurer do ? - Answer :Refund all the premiums paid
Quiz :What regard to the tax treatment of the death benefit in life insurance is
true? - Answer :Death benefits are exempt from taxation
Quiz :A hospital confinement indemnity insurance policy pays: - Answer :A
daily dollar benefit for each day the insured is confined to a hospital

Quiz :Disability income insurance offers various riders to supplement benefits
from these policies
...

Quiz :Sam's insurance policy pays a dividend
...
- Answer :Mutual
Quiz :All of the following are examples of the dividend options available on a
whole life insurance policy, except:
A
...
Application to reduce premium
C
...
Life income with period certain - Answer :D
Quiz :A policy owner makes the last premium payment on his $250,000 nonpar whole life policy today
...
When will the cash
value reach $250,000
...
About 13 years from now
B
...
Never, he didn't pay up to age 100
D
...
Arnold has
group health insurance through his company that also insures Bertha
...
Select the correct
statement below about how benefits are affected by the coordination of
benefits provision in both plans
...
If Bertha files a medical claim Arnold's company is considered secondary
...
If Arnold files a medical claim Bertha's company is considered primary
C
...
Since both Arnold and Bertha are covered by a group plan neither insurer
will pay if the other insurer is primary - Answer :D
Quiz :All of the following are used in determining life insurance rates, except:

A
...
Insurance company expenses
C
...
Policy reserves - Answer :Policy Reserves
Quiz :In the California Insurance Code there is a definition that reads, in short,
"
...
" This is the definition of :
A
...
A solicitor
C
...
When a disability
income insurance application is submitted, what reason might the
underwritting department use to reject it ?
A
...

B
...
Disability insurers have to eliminate applications that seem likely to have
losses much more frequently or much more severely than what the insurer's
rates anticipate
...
None of the above
...

(Select the most correct response)
A
...
Within 6 months before the license is to expire
C
...

D
...
This is
a description of:

A
...
The California Life and Health Insurance Guarantee Association
C
...
None of the above - Answer :The California Life and Health Insurance
Guarantee Association
Quiz :Which of the following is not legal activity in this state ?
A
...

B
...

C
...

D
...

A
...
Certificate of insurance
C
...
Monthly premium notification on a non-participating plan - Answer :B
Quiz :Which of the following is false about dividends paid from life insurance
policies ? A dividend is:
A
...

B
...
It is considered
taxable
...
Not guaranteed to be paid to the policy owner
...

A
...
Coordination of benefits
C
...
He
obtained his insurance license (life and health) in January of 1998
...
Complete 25 hours of life and health continuing education only
B
...
Complete 25 hours of life and health continuing education, 8 of which are
LTC specific
D
...
The type of plan he
has is a/an:
A
...
Key person policy
C
...
Occupational Policy - Answer :D
Quiz :Teresa is injured while woking at her company's plant
...
She has a non-occupational group
health plan at work
...
Non-occupational injuries are specifically excluded in her group health plan
...
This is an on-the-job injury
C
...
All the above are false
...
It is a statement merely made to the best of one's knowledge, and can only
be express
...
Should either party violate a warranty it entitles the other party to cancel
the contract
...
Warranties can be made about events in the past, present or future
...
Warranties made at or during the execution of a policy must be contained
in the policy, signed by the insured and attached to the contract - Answer :A

Quiz :Ben is a life agent who would like to do business with the rock Solid
Insurance Company but he doesn't have an appointment to sell their policies
...
No, appointments are always required to be filed prior to submitting
applications
...
Yes, and the application need not be approved by the underwriting
department
...
Yes, and if the insurer approves the application they must appoint Ben
within 14 days
...
All the above are false
...
All renewal fees are paid but there is a termination of all appointments
B
...
Transactions of insurance are no longer executed following a 1 year period
...
- Answer :A
Quiz :A health insurance contract states that if, during the first 30 days after
the policy's effective date, an illness occurs, there will be no benefits paid out
of the policy
...
Probationary period
B
...
Waiver period
D
...
The face amount will be the same on the new extended term plan as the
old 10-pay life policy
B
...

C
...

D
...
Sub-standard
B
...
Standard
D
...
The average age of all members of the group
B
...
How long of a waiting or elimination period the policy reflects
D
...
Choose from below the best description of a contingent
beneficiary
...
One with the first right to receive proceeds if there is no surviving primary
beneficiary and the insured dies
...
One with the right to proceeds only if the primary and secondary
beneficiary die in a common disaster
...
One with the right to proceeds if the insured dies
...
All the above are false - Answer :A
Quiz :The insurer can change the premium assuming it is changed for all
insureds in a class
...
This is a/an ____ policy
A
...
Cancelable
C
...
Non-cancelable - Answer :A
Quiz :Which of the following is a type of single deductible for all family
members that, when satisfied, overrides any remaining family member's
individual deductibles ?

A
...
A per cause deductible
C
...
Family deductible - Answer :D
Quiz :Choose the correct statement about a cost of living rider
...
Is only charged a flat fee to have the rider attached
B
...

C
...
All the above - Answer :C
Quiz :Which of the following supports the Medical Information Bureau ?
A
...
The Department of Insurance
C
...
None of the above - Answer :A
Quiz :A disability policy is issued and premiums are paid on an annual basis on
the 1st of January
...
On the 8th day
after the premium due date, the insured submits a claim for medical expenses
...
It will not be paid because the policy expired on the anniversary date
...
It will be paid because the insured did not request a formal cancellation
C
...

D
...
- Answer
:D
Quiz :If the premium on an individual health insurance policy is paid annually,
semi-annually, or quarterly what is the minimum grace period required ?
A
...
20 days

C
...
None of the above - Answer :C
Quiz :There are four basic classes of life insurance
...
A life paid-up-at-age-55 policy
B
...
A group life insurance policy
D
...
3 years
B
...
2 years
D
...
Any unpaid balance of the premium for the current policy year
B
...
Any existing indebtedness to the insurer not already deducted
...
Future years premiums that are not yet due - Answer :D
Quiz :Carl's policy lapsed
...
Carl's insurance company accepted his late payment
B
...
Carl was issued a reinstatement application
D
...
31 days

B
...
60 days
D
...
Evidence of insurability
B
...
Evidence of conversion
D
...
What is his Grace Period?

A
...
30 days
C
...
10 days - Answer :D
Quiz :Mr
...
What are they called?

A
...
Responses
C
...
Perils - Answer :C
Quiz :In the insurance business, risk can best be defined as
A
...
Uncertainty regarding the future
C
...
Uncertainty regarding when death will occur - Answer :C
Quiz :Tom buys his wife Mary a $50,000 diamond ring
...
This is an
example of risk

A
...
Reduction
C
...
Transference - Answer :B
Quiz :What is required when an applicant reveals conditions that require more
information?
A
...
Attending physician's statement
C
...
Agent's report - Answer :A
Quiz :Which of the following statements defines partial disability ?
A
...
An employee who loses sight in one eye because of an accident on the job
C
...
The prorated income an employer pays an injured employee out on shortterm disability - Answer :A
Quiz :A supplemental insurance policy that pays a set amount for each day
that an individual is hospitalized is known as:
A
...
Temporary major medical
C
...
Hospital surgical expense - Answer :C
Quiz :Which settlement option allows only the death benefit earnings to be
paid to the beneficiary ?
A
...
Fixed amount option
C
...
Fixed period option - Answer :A

Quiz :Which statement is true regarding participating in a group health
insurance plan?
A
...
A non-contributory group health plan must cover all eligible members
C
...
A minimum participation of 50% of eligible members is required for a
contributory group health plan - Answer :B
Quiz :According to state law, what size print must be used for the licensee's
license number on all price quotes, business cards, and printed material?
A
...
to be printed on any printed
material
B
...
The same size print as the licensee's phone number, fax number or address
D
...
Extended paid-up insurance
B
...
Extended term insurance
D
...
Specialists can choose to be gatekeepers for their patients
B
...
Referrals to specialists must be authorized by the gatekeeper
D
...
Deductibles

B
...
Out-of-pocket maximums
D
...
Plan sponsors and beneficiaries
B
...
Plan sponsors and employees
D
...
Interest option
B
...
Fixed amount option
D
...
Complete a course on workers compensation and general principles of
employer liability
B
...
Complete a course on long-term disability coverage and workers
compensation coverage
D
...
Premium
B
...
Adjustment factor
D
...
Policy illustration

B
...
Underwriting criteria
D
...
The surviving children
B
...
The disabled worker
D
...
The beneficiary
B
...
The dividend schedule
D
...
$25,000
B
...
$85,000
D
...
The applicant must be insurable in order to have coverage only under the
binding receipt
B
...
Only a binding receipt always provides insurance that is effective from the
date receipt is given
D
...
Gainfully disabled
B
...
Presumptively disabled
D
...
Prescription drugs
B
...
Preventive services
D
...
Only the result need be accidental
B
...
Both the cause and the result need be accidental
D
...
This mans:
A
...
She will get better service than a "fee for service" provider
C
...
All the above above are true statements - Answer :A



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