CLAHS California Life, Accident and Health or Sickness Examination - Set 1 - Part 1

Test your knowledge of technical writing concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 1: Under the California Insurance Code, insurance is a contract in which one party agrees to indemnify another against loss, damage, or liability arising from which kind of event?

A contingent or unknown event

A certain and scheduled event

An event producing a guaranteed gain

A past event known to both parties

Question 2: In insurance, the uncertainty about whether a loss will occur is the definition of which of the following terms?

Peril

Hazard

Risk

Exposure

Question 3: An investor buys shares of stock that may rise or fall in value. Which type of risk does this situation present?

Pure risk

Morale risk

Physical risk

Speculative risk

Question 4: A kitchen fire damages an insured's home in Fresno. In insurance terms, the fire itself is best described as which of the following?

The hazard

The peril

The risk

The exposure

Question 5: Anything that increases the likelihood or severity of a loss, without itself being the cause of the loss, is known as which of the following?

A hazard

A peril

A pure risk

An exposure unit

Question 6: An applicant has a documented heart condition confirmed by medical tests. For underwriting purposes, this condition is best classified as which type of hazard?

Moral hazard

Morale hazard

Speculative hazard

Physical hazard

Question 7: An applicant deliberately conceals a known heart condition on a health application to obtain coverage. This dishonest conduct is best classified as which type of hazard?

Physical hazard

Morale hazard

Moral hazard

Speculative hazard

Question 8: The principle that the larger the group of similar exposure units, the more accurately future losses can be predicted, is known as which of the following?

The law of large numbers

The principle of indemnity

The law of agency

Adverse selection

Question 9: A wage earner faces the possibility of losing income if a disabling injury occurs, even in years when no injury happens. This ongoing possibility is best described as which of the following?

A realized loss

An earned premium

A peril

A loss exposure

Question 10: A consumer purchases a health insurance policy to shift the financial consequences of a possible illness to an insurer. Which risk management technique does this represent?

Risk avoidance

Risk transfer

Risk retention

Risk reduction

Question 11: A person decides never to go scuba diving so that the chance of a diving injury is eliminated entirely. Which risk management technique does this choice illustrate?

Risk reduction

Risk retention

Risk avoidance

Risk transfer

Question 12: Most insurance policies exclude losses caused by war. The exclusion exists because covering war would violate which requisite of an ideally insurable risk?

The loss must be non-catastrophic

The loss must be accidental

The loss must be measurable

The premium must be affordable

Question 13: Under the California Insurance Code, a contingent or unknown event that may be insured against may relate to which of the following time frames?

Only future events

Only present events

Only intentional events

Either past or future events

Question 14: For life and disability insurance under California law, when must the insurable interest exist in order for the contract to be valid?

Only at the time of loss

At the time the contract takes effect

Continuously throughout the policy term

Only when the claim is paid

Question 15: A health policy reimburses an insured for actual covered hospital charges but pays nothing beyond those costs. Which insurance principle does this reflect?

Utmost good faith

Adverse selection

The principle of indemnity

The law of large numbers

Question 16: An insurance contract assumes complete honesty and full disclosure of material facts by both the applicant and the insurer. This expectation reflects which principle?

Utmost good faith

Indemnity

Reasonable expectations

Estoppel

Question 17: When a producer gathers accurate and complete information on an application and screens the applicant before submitting it to the insurer, the producer is acting in which role?

Claims adjuster

Actuary

Reinsurer

Field underwriter

Question 18: An underwriter assigns each applicant to a risk class. Which of the following is NOT one of the standard underwriting risk classifications?

Preferred

Standard

Speculative

Substandard

Question 19: An insurer finds that mostly unhealthy individuals are applying for and renewing its new health plan, while healthier people decline it. This tendency is known as which of the following?

Adverse selection

Profitable distribution of exposures

Coinsurance

Reinsurance

Question 20: In an insurance contract, the consideration given by the applicant consists of which of the following?

The insurer's promise to pay claims

The premium and statements in the application

A guarantee of future dividends

The policy's written terms

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