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Code and Ethics California Insurance Exam Questions And Correct Detailed Answers (Verified Answers) Already Graded A+
Question 1: What do individuals use to transfer their risk of loss to a larger group?
a) Indemnity
b) Insurance
c) Insurable interest
d) Exposure
Correct Answer: b) Insurance
Question 2: A life insurance policy can be delivered by all of the following means, EXCEPT
a) Personal delivery by a trained employee of the insurer, with a delivery receipt.
b) Certified mail.
c) Priority mail.
d) First class mail with a delivery receipt.
Correct Answer: c) Priority mail.
Question 3: An independent agent may have contracts with which of the following?
a) More than one insurer
b) The Department of Insurance
c) The Commissioner
d) Brokers
Correct Answer: a) More than one insurer
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Question 4: What will happen if an agent submits an application to an insurance company to which he is not appointed?
a) The agent will be found guilty of a misdemeanor.
b) If the insurer accepts the policy, it must appoint the agent.
c) The application will not have to be approved by an underwriter.
d) The insurer will not accept the policy.
Correct Answer: b) If the insurer accepts the policy, it must appoint the agent.Question 5: The key factor of representation that allows the injured party to rescind the contract is
a) That any misrepresentation is considered fraud.
b) Representations are statements believed to be true and hold no legal consequences.
c) The promise or assurance of the representation.
d) If the representation is false in a material point.
Correct Answer: d) If the representation is false in a material point.
Question 6: When an auto insurance policy is cancelled for nonpayment of premium, how many days' notice must the insurer provide to the policyowner?
- 10 days
- 15 days
- 20 days
- 30 days
Correct Answer: a) 10 days
Question 7: A deceptive act or practice committed by a person with the intent to secure an unfair advantage or unlawful gain is known as
a) Transacting without a license.
b) Misinformation.
c) Misrepresentation.
d) Fraud.
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Correct Answer: d) Fraud.
Question 8: Insurance policy is
a) A statement of insurable interest.
b) A verbal or written agreement between two parties to transfer risk.
c) Any method used to transfer or avoid catastrophic risk.
d) A written instrument in which a contract of insurance is set forth.
Correct Answer: d) A written instrument in which a contract of insurance is set forth.Question 9: Any person or governmental entity that provides information about an individual to an agent, insurance company, or insurance-support organization is known as a(n)
a) Investigative source.
b) Institutional source.
c) Affiliate.
d) Underwriting source.
Correct Answer: b) Institutional source.
Question 10: Representations in insurance contracts qualify as
a) Express warranties.
b) Misrepresentations.
c) Facts.
d) Implied warranties.
Correct Answer: d) Implied warranties.
Question 11: In which Medicare supplemental policies are the core benefits found?
a) Plans A-D only
b) All plans
c) Plans A and B only
d) Plan A only
Correct Answer: b) All plans
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Question 12: In 2010, a law firm purchased a buy-sell agreement policy on each of its partners. In 2015, one partner left to start a new practice; however, the firm continued to pay the premiums on the policy. In 2017, the former partner died. The partners of the firm filed a claim on the policy to collect the death benefit despite the fact that the deceased was NOT part of the firm or its leadership. The insurer
a) Will pay the death claim to the beneficiary for this policy as written since insurable
interest existed at the time of application.
b) Can legally sue the firm for insurance fraud and WILL NOT pay a claim due since the
insurable interest no longer exists.
c) Will pay the death claim to the beneficiary since the premiums were current although
according to contract law, insurable interest MUST exist at the time of claim.
d) Will refund "unearned" premiums and WILL NOT pay the claim since the insurable
interest no longer exists.Correct Answer: a) Will pay the death claim to the beneficiary for this policy as written since insurable interest existed at the time of application.
Question 13: What is reinsurance?
a) An agreement between an insurer and an insured
b) An agreement between a ceding insurer an assuming insurer
c) An agreement between an originating insurer and a ceding insurer
d) An agreement between a domestic insurer and a foreign insurer
Correct Answer: b) An agreement between a ceding insurer an assuming insurer
Question 14: Which of the following best describes an agent's fiduciary capacity?
a) Commingling premiums with personal funds
b) Soliciting insurance contracts to third parties
c) Maintaining a current insurance license
d) Promptly forwarding premiums to the insurer
Correct Answer: d) Promptly forwarding premiums to the insurer
Question 15: All of the following may be covered under the Employers Liability policy
