2. In regards to insurance, risk can be defined as
    - Uncertainty regarding loss
  3. A peril is
    - The actual cause of the loss.
  4. For an insurance contract to be enforceable, which of the following parties must be considered competent?
    - Applicant
  5. A hazard that deals with attitudes, behavior, and habits is an example of:
    - Moral hazard
  6. The principle used as the basis for establishing probability of losses occurring in the insurance industry is:
    - Law of large number
  7. For an insurance contract, utmost good faith means:
    - Each party relies upon the truthfulness of the other.
  8. Which of the following statements in regards to representations is false?
    - Representations can be altered or withdrawn after issuance of the contract
  9. Underwriting is a process of:
    — Selecting, classifying, rating and determining coverages.
  10. The law of large numbers is a principal that basically says:
    - The larger the amount of information gathered, the more reliable that information will be.
  11. When large numbers of similar risks are combined in a group future claims become more
  12. A hazard is best defined as:
    - Anything that increases the chance of loss or severity of loss due to a peril.
  13. Ideally Insurable Risk means:
    - the risk is financially within reason and is reasonable to insure.
  14. Which of the following becomes part of the contract, is guaranteed to be true, and if untrue, may be grounds for rescinding the policy?
    - Warranty
  15. ______________ Involves the exchange of a premium for a promise, which means that the insurer is the only party making a legally enforceable
    • promise to pay a claim.
    • - Unilateral Contract
  16. What are the four major elements of a contract?
    - agreement, competent parties, legal purpose, consideration
  17. Which of the following statements is incorrect concerning warranties?
    - An implied warranty is must be included in the contract or some document signed by the insured and made part of the contract.
  18. An insurance contract promises to pay benefits based upon a future uncertainty such as death, or illness describes which feature of an
    - Aleatory
  19. A condition that leads to a loss is known as a
    - Hazard
  20. Which of the following describes the situation when one party intentionally gives false information in order to benefit from unlawful gain?
    - Fraud
  21. When can a representation be altered or withdrawn?
    - It can be altered or withdrawn before the insurance is issued.
  22. Insurable interest is best described as:
    - The policyowner must expect to suffer a loss when the insured dies or becomes disabled.
  23. For insurable interest to exist:
    - the insured must establish that they actually own something to be insured.
  24. Which of the following are the main types of risks?
    - Speculative and pure
  25. Insurance is a contract whereby one undertakes to indemnify another against:
    - Damage
  26. Underwriting is a process of:
    - Selecting, classifying, rating and determining coverages.
  27. The law of large numbers is a principal that basically says:
    - The larger the amount of information gathered, the more reliable that information will be.
  28. What is the term that describes balancing preferred risks with poor risks, and average risks in the middle?
    - Profitable distribution of exposures
  29. What is rescission?
    Rescission is the revocation of a contract.
  30. Which of the following is not correct concerning warranties?
    - An implied warranty must be included in a document signed by the insured and made part of the contract.
  31. The price of insurance for each exposure is referred to as:
  32. What is meant by the term adverse selection?
    - The tendency of people with greater than average exposure to loss to purchase insurance.
  33. Risk is:
    - the uncertainty or chance of a loss occurring.
  34. Alcoholism is an example of a:
    - Moral hazard
  35. A relinquishment of a known right is considered to be?
    - Waiver
  36. Regarding the materiality of representations and concealment which is true?
    - It is determined by the effect of the facts on each party to the contract in determining his or her estimate of the disadvantages of the contract.
  37. Balancing poor risk with preferred risk, with the average or standard risk being in the middle is known as what?
    - Distribution of exposures
  38. A representation in an insurance contract qualifies as:
    - An implied warranty
  39. The function of insurance is best described as:
    -It spreads financial risk over a large group so as to minimized the loss to any one individual
  40. Which of the following is NOT part of a contract that is enforced by the law?
    - Tort law
  41. The following information does NOT need to be communicated in a contract EXCEPT:
    - Information the other party deems confidential.
  42. Which of the following is false?
    - Materiality of concealment is judged different than materiality of a misrepresentation.
  43. ===============================================================
    2 Qz
  44. If an insurer issues a policy, within how many days must it file a notice of appointment with the Commissioner?
    -If the insurer issues a policy, the insurer must forward to the Commissioner a notice of appointment of the agent as the insurer's agent not more than 14 days after the agent submitted the insurance application.
  45. Which of the following is the best statement about selling without an appointment?
    - A licensed agent may offer a proposal for insurance to a client on behalf of an insurer for which the agent is not specifically appointed.
  46. Which of the following is not a difference in authority between an agent and a solicitor?
    - An agent can give insurance quotes, while a solicitor can only process claims.
  47. Life Settlement Brokers represent
    - The seller in the life settlement by finding a buyer for the existing policy.
  48. It is against the law for an insurance licensee to offer_____________ to anyone as an incentive to acquire some other type of business
    - Free insurance
  49. Upon termination of all appointments or cancellation of the bond required if acting as a broker your permanent license:
    • - All of these
    • = Does not permit the holder transact any insurance
    • =Shall not be cancelled but become inactive
    • =May be renewed or reactivated
  50. Which of the following is NOT covered under errors and omissions?
    -Fraud committed by the agent
  51. When a person gets their life license, without a company appointment their license is considered
    - Inactive
  52. A company has how many days to send an appointment for a new licensed agent to department of insurance?
    - 14 days
  53. All the following are true regarding denial of a license without a hearing except:
    - the applicant has been convicted of a misdemeanor
  54. What is the definition of a life agent?
    • - Any person authorized by and on behalf of a life, disability, or life and disability insurer to transact life, disability, or life and disability
    • insurance.
  55. All of the following are incorrect, except:
    - Insurance brokers represent the client in purchasing an insurance product
  56. Every life and accident and health agent is required to keep all records for a minimum of years.
    - 5
  57. All of the following are true concerning a life analyst except:
    - Must be employed by a life company
  58. The following acts are unlawful and are misdemeanors in California except when performed by a surplus line broker, EXCEPT.
    - Acting as a representative of an insurance company in soliciting and servicing policyholders in this state.
  59. Which of the following is the best statement about brokers selling insurance?
    - It could be unethical for a broker to accept both a fee from the client and a commission from the insurer.
  60. Agency law does not encompass which of the following?
    - Knowledge of the principal is knowledge of the agent.
  61. The following are valid reasons for the Commissioner to deny the use of a name EXCEPT.
    -The name is not being used by anyone and does not deceive the public.
  62. A life agent may transact all of the following except:
    - Twenty-four care coverage
  63. Which of the following would be incorrect regarding illustrations?
    - All of these are true.
  64. Which of the following is not a source of information an underwriter may use to find information about an applicant?
    - Department of Credit Reporting
  65. An employee assisting a life agent in acquiring and servicing life insurance applications and policies would need to be licensed as a:
    - Life agent license
  66. Which of the following agents can sell individual and small group health insurance through the exchange?
    - A&H age with a valid license and certified by the exchange
  67. All the following are entitled to a hearing concerning a license denial except:
    - Convicted of a misdemeanor involving insurance
  68. Which of the following is NOT an exception to the free insurance prohibition?
    - Insurance provided in connection with medical companies.
  69. Which of the following is NOT true regarding an agent and broker?
    - Brokers can legally bind insurance anytime necessary to do so.
  70. A producer may ask about all of the following to determine if an applicant qualifies for insurance EXCEPT:
    - Religious beliefs
  71. What is the penalty for transacting insurance without a valid insurance license?
    - Jail time up to 1 year and $50,000 fine.
  72. Which of the following is not considered a loss under errors and omissions?
    - An agent steals funds from customers.
  73. Any time there is a change in a licensees residence address, principal business address, mailing address, and/or email address the licensee must notify the
    • Commissioner electronically
    • - immediately.
  74. Which of the following describes someone who offers to advise any person insured under a life or disability insurance contract?
    - Life and disability analyst
  75. Which of the following is correct concerning illustrations?
    • - All preprinted illustrations shall contain a specialized notice in 12 point bold print, with space on all four sides that is made part of the
    • document itself or as an attached cover sheet.
  76. What type of policy will protect an agent against liability for failure to use due care and skill?
    - Professional liability
  77. Which of the following is not an action of transacting insurance?
    - Receiving compensation for transacting insurance.
  78. An agent's appointment with an insurer will be discontinued if all of the following circumstances exist, except:
    - Another insurer submits another appointment.
  79. During the transaction of insurance, the following must be included EXCEPT.
    - The applicant's sexual preference.
  80. Insurers that deal directly with insureds without the use of agents through various forms of print, visual and aural media are considered to be:
    - Direct response
  81. An A&H agent may transact all of the following except
    - Coverage on human lives
  82. Agents represent insurers in which of the following:
    - All of these
  83. Transacting without a license would result in which of the following penalties?
    - A fine not exceeding $50,000
  84. =============================================
    3 Qz
  85. Which of the following statements is true’?
    - A person with either a Life only or A&H only, or both a Life and A&H license must complete 24 hours of CE, which includes 3 hours of Ethics prior to license renewal.
  86. All the following are true concerning altering disability income polices applications except:
    - never
  87. All the following are true concerning penalties of unfair trade practices except:
    - Must be intentional
  88. All the following are true for continuing education requirements except
    - A life agent needs 48 hours of continuing education credits for the first and second licensing periods
  89. An agent who wishes to sell certified Partnership LTC policies in California must complete at least how many hours of special training before marketing any partnership-approved policies?
    - 16
  90. An MGA acts as an agent and produces and underwrites gross direct written premium equal to or more than________ % of the policyholder surplus as reported in the insurers last annual statement
    - 5%
  91. All the following are fiduciary duties except
    - Making sure your accounting is done proper in the same account, so you know what is your money and what is the company's money
  92. What entity has been actively involved in helping insurance remain under the jurisdiction of state government by bringing uniformity through model laws for the
    • insurance industry?
    • - NAIC
  93. A managing general agent with a life agent license and a written management agreement with one or more insurers is prohibited from doing which of the
    • following?
    • - None of these are excluded from the powers and authority given to the managing general agent.
  94. The difference between the chronic illness rider and long-term care insurance is:
    - Both required the insured to incur long-term care expenses
  95. Which one of the following is not a principal part of the Gramm-Leach-Bliley Act?
    - Do not call provisions
  96. When the insurer reinsurance a contract they are referred to as the:
    - Both of these terms
  97. If someone has a Life Agent Combo and a Property/Casualty license, then how many CE hours would be required in the current license term?
    - 24 hours
  98. Aiding, assisting, or advertising for a nonadmitted is:
    - These statements are all correct
  99. Any person to whom the commissioner has issued a seizure order and who refuses to deliver any books, records, or assets of an insurer faces
    - A misdemeanor punishable by a fine up to $1,000, a year in jail, or both.
  100. An A&H agent is entitled to transact insurance coverage for sickness, bodily injury, or accidental health and may include benefits for disability income and
    - Complete 3 hours of CE in ethics and code which will be included in the 24 hours of CE required and pay a fee.
  101. A licensed producer who appoints and supervises other producers, earns a commission override on the business of those producers and has overall responsibility for producers in a given territory is considered a(n)
    - Managing general agent
  102. An individual who handles premium payments in a trust capacity is considered to be
    - Fiduciary
  103. A surplus lines broker is required to obtain every applicants signature on a statement that provides all of the following information Except
    - The policy was denied by insurers licensed by the State of California
  104. All the following are true except:
    - Marketing division handles selling products and the expenses of the company
  105. All the following statements are true except:
    - Nonadmitted insurers cannot write in California
  106. When a company, an organization or a group of affiliated organizations form a subsidiary for the purpose of having the subsidiary provide all or part of the
    • insurance for the parent company or companies, this subsidiary is known as a:
    • - A captive insurer
  107. In order to qualify as a fraternal benefit society, an organization must have:
    - All of the above
  108. All the following are true concerning ethics with senior citizens except:
    - Must give an additional 30 days more for a free look period than people who are not senior citizens
  109. __________ company is an unincorporated company that consists of subscribers managed by an attorney.
    - Reciprocal Insurance
  110. All of the following are not considered an administrator except
    - Contracted by an insurance company.
  111. The accelerated death benefit for chronic illness rider must disclose all of the following except:
    - The policy or certificate is a Medicare supplement
  112. All the following are true concerning conservation of a company except:
    - $100,000 is the most that a guaranteed company will pay for a life claim
  113. All of the following are true concerning code and ethics except:
    - Be truthful and inaccurate when you explain your services.
  114. Which is false concerning the accelerated death benefit for chronic illness rider?
    - It requires an A&H license to sell
  115. An analyst may not receive any fee not based upon a written agreement signed by the party to be charged. This agreement must include all the following, except
    - Statement of services to be performed to which no fee will be charged
  116. All the following are true concerning termination of license except
    - licensee can give up their license with a 90 day notice
  117. All the following are examples of a pretext interview except:
    - gathering information for underwriting
  118. All of the following describe an MGA EXCEPT.
    - The legal entity which acts on behalf of, or in place of, it's principal.
  119. Conservation applies to:
    - All of the above.
  120. The purpose of insurance regulation is to protect the public by all of the following except
    - Interpreting policy provisions
  121. Life only agents selling annuities are required to complete an course before submitting their first application.
    - 8 hour
  122. Which of the following would require a Certificate of Registration to act as an Administrator in connect with collection of premiums and settling claims for life,
    • health, or annuity coverages?
    • - None of the above.
  123. "Paid in capital" applies to all companies except:
    - foreign mutual
  124. All the following are true concerning the code except:
    - the code is the complete guide to ethical behavior
  125. A Property and Casualty Agent is required to continue their education by completing
    - a total of 24 hours per license term of continuing education courses.
  126. Which statement is false concerning interpretation of policy provisions?
    - Executive branch is headed by the insurance commissioner which enacts the laws.
  127. How many hours of continuing education are required per renewal for a life-only agent?
    - 24 hours, 3 of the hours must be in ethics
  128. ========================================
  129. The primary purpose of key person life insurance is to protect:
    - A business against the financial loss of an important executive or employee.
  130. All of the following are false regarding mailing requirements on Life Policy information, except:
    - send to owner
  131. All the following are important reasons why people buy life insurance. Which is the most important reason?
    - because someone needs to keep on living
  132. The CLHIGA provides protection for insolvency of member life and health insurers for which of the following limits?
    - $300,000 per one insured life
  133. Which statement is true concerning definitions for the words "shall and may"?
    - neither are true
  134. Which one of the following is a classification upon which risk and insurability are present?
    - Location of the home
  135. Which of the following would not be a method of how much insurance is needed?
    - agent needs approach
  136. Which of the following statement is true?
    - Disclosing results of a genetic test in a manner that provides identifying characteristics is submit to a fine.
  137. The CLHIGA provides protection against insolvency for all of the following except:
    - All are excluded from the guarantee association protection.
  138. All the following are true concerning conviction of insurance fraud except
    - $10,000 fine is the max
  139. All the following beneficiaries receive the death benefits exempt from probate except
    - estate
  140. All the following can be the insured except
    - beneficiary
  141. Every licensee who receives an inquiry from the DOI concerning a claim must furnish a complete written response, including any documentation and claim files
    • requested within
    • - Within 21 calendar days
  142. Under the False and Fraudulent Claims Article, if a person is convicted of insurance fraud, the fine can be up to:
    - $150,000
  143. This is an estimate of the financial loss caused by a person's death using the present value of future earnings:
    - Human life value approach to life insurance
  144. Every insurer must pay the claim within what time period after all the parties are in agreement of the amount of the claim?
    - 30 calendar days
  145. Limit of liability in life insurance is what?
    - death benefit
  146. A life, health, or disability insurer can discriminate based upon:
    - Age and sex of the proposed insured
  147. Which one is the least practical?
    - avoidance
  148. Which of the following Is incorrect regarding any written notice required to be given or mailed to a person by an insurer relating to any insurance in this state may do so by electronic transmission
    - Insurer shall keep a retrievable copy of the confirmation and/or signature while the policy is in force and for up to 3 years after.
  149. All the following are examples of fair discrimination except
    - religion
  150. Which one bests describes key person insurance?
    - to protect business in case of death of employee
  151. Concerning fraud the false statement would be
    - Every insurer must maintain their own fraud unit to investigate fraudulent claims from other insurers.
  152. There are 3 provisions that the code protects people with group life and disability which is not one?
    - subrogation
  153. All the following are true concerning fraud or are examples of fraud except:
    - 80% of all claims reported are fraud
  154. Per the Code, the best definitions of “shall” and "may" are
    - Mandatory & permissive
  155. Any insurer has how many days to accept or deny a claim?
    - 40 calendar days.
  156. All the following are true concerning life and health guarantee association except
    - $250,000 max paid for a single health policy
  157. An insured's consent to receive offers, notices, or disclosures by electronic transmission may be acquired
    - all of the answers are correct
  158. Salary continuation plans:
    - The business can set the plan up with a 3rd party
  159. Any carrier that provides replacement coverage for hospital, medical or surgical benefits within 60 days of discontinuance of a prior policy must
    - Cover all employees and dependents that were validly covered under the previous policy at the time of discontinuance.
  160. All the following are not true concerning mortality tables except:
    - deals with life insurance
  161. All the following are examples of unfair discrimination except
    - sex
  162. The CLHIGA would cover which of the following?
    - Life insurance contracts
  163. California law requires that the insurer provide falsification information to a person filing a claim by:
    - Prominently printing the information on the claim form
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