State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
A California life policy does not state the exact dollar amount of premium but states the basis on which the premium will be calculated. Under California Insurance Code Section 381, this policy is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 381 requires every California policy to specify, among six items, the premium — or, if the exact premium is not ascertainable at the time the contract is made, the basis upon which the premium is to be calculated. Stating the calculation basis satisfies the statutory requirement when the exact amount is not fixed at issue. The other required items are the parties, the subject matter insured, the insured's interest, the risks, and the period of coverage.
Why the other options are wrong
- B) Section 381 explicitly permits a premium stated by its calculation basis when the exact amount is not ascertainable at issuance.
- C) Voidability is not an agent's prerogative; statutory compliance is judged by the code, not by an agent's election.
- D) No such attachment requirement exists; a premium receipt is evidence of payment, not a component of validity under Section 381.
Memory hook
381 six-pack: parties, subject, interest, risks, period, premium — and 'premium basis' counts for the last one.