General Insurance PrinciplesQuestion 178 of 716
Under the California Insurance Code, insurance is best described as which of the following?
a.An investment contract that guarantees the buyer a stated rate of return on every premium dollar
b.A government benefit program that pays benefits to all residents regardless of contract or premium
c.A contract whereby one party undertakes to indemnify another against loss from a contingent event
d.An interest-bearing savings account whose earnings accumulate free of all federal and state income tax
Explanation
Cal. Ins. Code §22 defines insurance as a contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies. It is not an investment guarantee, a government program, or a savings account.
Law Reference: Cal. Ins. Code §22This topic, taught in full in the California Life & Health Insurance Producer Exam guide. California Life & Health Insurance Producer Exam — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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Related questions on this topic
- Which of the following is an example of a pure risk that an insurer would accept?
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Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)