State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
An insurer issues a policy on a reporting basis where the exact premium cannot be determined until the contract terminates. To satisfy CIC Section 381, the policy must:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Section 381 requires each policy to specify the parties, the life or property insured, the insured's interest, the risks insured against, the period of coverage, and the premium — or, when the exact premium is determinable only at termination, the basis and rates upon which the final premium will be determined and paid. A reporting-form policy satisfies the statute by stating its premium basis and rates up front, keeping the contract definite even though the final dollar amount varies.
Why the other options are wrong
- A) A fixed dollar premium is one way to comply, but reporting-form policies need not state a fixed amount; stating the basis and rates suffices.
- B) Omitting premium entirely would violate Section 381's required elements.
- D) Premium determination must be set by the policy's stated basis and rates, not left to the policyholder's discretion.
Memory hook
381 wants the premium or the formula. Reporting policies show their work: basis + rates = final premium.