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CA Life, Accident, & Health Practice Exam Questions and answers
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CA Life, Accident, & Health Practice Exam Questions and answers
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CA Life, Accident, & Health PracticeExam Questions and answers
Why would a large manufacturer choose to self-insure rather than buy an insurance policy
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from an insurance company? - to save insurance premiums by paying relatively minor
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losses out of company funds
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The federal Risk Retention Act of 1986 contains guidelines for which of the following
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entities? - Risk retention groups
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Which of the following is an example of an unauthorized insurance company in Illinois? -
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Company B, an Iowa-based company that does not hold a certificate of authority in Illinois
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and sells products that are not approved by the Illinois insurance department
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Which insurance company function calculates company mortality and morbidity rates as
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well as the dividends on participating life insurance policies? - Actuarial Division
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The purpose for the Buyer's Guide, which must be given to every insurance prospect in
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the first meeting with a producer, is to: - explain the general features, benefits, and
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conditions of the type of insurance being considered
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The purpose for the Policy Summary, which must be given to every insurance applicant
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before an application is signed, is to: - provide buyers with details of the specific
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insurance contract they are considering for purchase
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The main purpose for errors and omissions insurance (E&O) is to: - cover damages that
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arise due to services a producer non-willfully failed to render
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(does not protect against willful misconduct, and will not protect the producer who willfully
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engages in an unfair trade practice)
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Though not specifically cited in the producer's contract, the producer is expected to
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telephone prospects on the insurer's behalf to arrange sales appointments. This is an
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example of what kind of producer authority? - implied authority
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Jerry owns a life insurance policy with premiums payable directly to the insurer's home
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office. However, for the past five years Jerry has sent his payments to his agent, who then
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forwards them to the insurer. The insurer had accepted this arrangement but then tries to
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cancel Jerry's policy when it learns he had died while the premium was being forwarded
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by the agent. The insurer will probably not be able to cancel the policy in this case
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because of which of the following legal principles?
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misrepresentation II
waiver II
,estoppel II
fraud - estoppel II II II
(In this case, the insurance company has allowed Jerry to send payments to his agent
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instead of directly to the home office for more than five years. As a result, the insurer has
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given up its right to have payments sent to the home office. The insurer is estopped from
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later asserting its right to receive direct payment.)
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An applicant for a $500,000 whole life insurance policy pays the initial premium along with
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his application. In this case, what has the applicant done?
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accepted an offer from the insurer II II II II II
made a counteroffer to the insurer II II II II II
accepted a counteroffer from the insurer II II II II II
made an offer to the insurer - made an offer to the insurer
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Ambiguities in an insurance contract are most often interpreted in favor of the policyowner
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because insurance contracts are:
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unilateral
conditional
contracts of adhesion II II
aleatory - contracts of adhesion II II II II II
For a life insurance contract to be enforceable, which of the following parties must be
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legally competent?
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insurer
applicant, insurer, and beneficiary II II II
applicant and insurer II II
applicant - applicant and insurer II II II II II
II Specific to California, what does the term "twenty-four hour coverage" refer to?
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-joint issue of a workers' compensation policy with non-occupational health insurance
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coverage
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-a policy that is guaranteed to be issued within 24 hours of application
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-coverage that applies to personal property, such as a home or automobile II II II II II II II II II II II
-long-term care insurance - joint issue of a workers' compensation policy with non-
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occupational health insurance coverage II II II
II Which of the following entities regulates the business of insurance in California?
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the National Association of Insurance Commissioners
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the state government
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the state and the federal governments
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,the federal government - the state and federal governments
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(In addition to state authority, the business of insurance—to the extent it affects or is
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associated with interstate commerce—is also regulated by the federal government under
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Title 18 of the U.S. Code.)
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In California, which of the following statements is correct regarding the state's insurance
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Commissioner?
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He or she is appointed by the Governor.
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He or she is mainly an advocate for licensed insurance companies and their interests.
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He or she serves terms of six years.
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He or she is an elected official. - He or she is an elected official
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(The people of the state of California elect the Insurance Commissioner for four-year
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terms. He or she is mainly an advocate for insurance consumers.)
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II In California, the state's Insurance Commissioner
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serves terms of six years. II II II II
is mainly an advocate for licensed insurance companies and their interests.
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is appointed by the Governor.
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is an elected official. - is an elected official
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Which of the following best defines the main purpose of the California Department of
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Insurance?
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to protect the interests of California insurance consumers
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to set forth and pass insurance laws and regulations
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to serve as an advocate for California insurance companies and insurance licensees
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to serve as a lobbyist for the interests of California insurance companies and the
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insurance business at the federal level - to protect the interests of California insurance
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consumers
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(The main purpose of the California Department of Insurance is to serve as an advocate
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for insurance consumers and to protect their needs and interests. It administers and
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enforces the laws that the state legislature passes. Through its enforcement capabilities,
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the Department also advances the interests of certified insurers and licensed producers;
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however, it does not actively lobby for the industry at the federal level.)
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II In California, the insurance business is regulated by which of the following?
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National Association of Insurance Commissioners II II II II
State and federal government II II II
State government II
Federal government - State and federal government
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, (In addition to state authority, the business of insurance—to the extent it affects or is
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associated with interstate commerce—is also regulated by the federal government under
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Title 18 of the U.S. Code.)
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Being admitted to operate as an insurer and to transact one or more lines of insurance in
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California is
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automatically granted to any entity if it is admitted in at least one other state. II II II II II II II II II II II II II II
evidenced by a certificate of authority. II II II II II
limited to entities organized as stock insurers.
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restricted to organizations domiciled in California. - evidenced by a certificate of authority.
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(Only those persons or entities that have been admitted to act as an insurer may transact
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insurance business in California. Admission is secured by receiving a certificate of
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authority from the California Commissioner of Insurance.)
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The prohibition against and penalty for acting on behalf of a non-admitted insurer does
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not apply to whom?
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licensed solicitors II
licensed life agents II II
licensed disability agents II II
licensed surplus lines brokers - licensed surplus lines brokers II II II II II II II II II
II A primary insurer is the insurer that
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is domiciled in California but is certified to transact insurance in other states.
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accepts ceding business and assumes a part of another insurer's loss exposure.
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writes only one line of coverage. II II II II II
transfers its loss exposure to another insurer in a reinsurance transaction. - transfers its
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loss exposure to another insurer in a reinsurance transaction.
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(A primary insurer is the insurer that transfers part of its liability or exposure to another
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insurer in a reinsurance transaction.)
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Which of the following statements is correct about authorization to act as an insurer in
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California?
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Authority is limited to entities organized as stock insurers. II II II II II II II II
Authority is evidenced by a certificate of authority. II II II II II II II
Only organizations domiciled in California can be authorized.
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Authority is automatically granted to any entity if it is admitted in at least one other state. -
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Authority is evidenced by a certificate of authority.
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