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PSI INSURANCE EXAM
Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers
-Format: Multiple-choice / Flashcard
Question 1: Which type of plan is used to buy out a partner's business interest in the event of a disability?
Answer:
disability buy-sell agreement
Question 2: Which of the following is considered an element of insurable risk?
Answer:
Premiums must be calculable based on prior loss statistics.Question 3: All of the following are required signatures on a life insurance application EXCEPT
Answer:
the minor in a juvenile policy.Question 4: When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax?
Answer:
when the taxpayer's unreimbursed medical expenses exceed 7.5% of adjusted gross income during a taxable year
Question 5: A Basic Hospital Policy pays expenses for
Answer:
hospital room and board.Question 6: If an insurance company obtains an investigative consumer report on a prospective insured, it MUST inform the prospect that it is permitted to do so under which of the following Federal laws?
Answer:
the Fair Credit Reporting Act Question 7: Which of the following is a characteristic of indexed universal life insurance?
Answer:
A portion of the cash value is tied to an equity index account linked to a stipulated stock index.Question 8: Which of the following is a distinguishing feature of a variable life insurance policy?
Answer:
The cash value earnings are based on the performance of the separate account.Question 9: Which of the following may be thought of as a time deductible rather than a dollar deductible in a disability income policy because benefits are not payable during that time?
Answer:
elimination period
Question 10: All the following are elements of an uninsurable loss EXCEPT
Answer:
affordable premiums can be charged.
Question 11: What does the grace period protect the policyholder from?
Answer:
an unintentional lapse of the policy Question 12: Which of the following requires the claim information to be submitted to the insurer prior to treatment to determine whether the treatment is covered and how much the insured's plan will pay?
Answer:
precertification provision
Question 13: What does an application for insurance contractually represent for the insured?
Answer:
an offer Question 14: The feature of a Life Insurance Policy stating that the policy will NOT cover certain risks is known as
Answer:
exclusion.Question 15: Which of the following is TRUE in a key employee life insurance policy?
Answer:
The corporation is the applicant and policy holder. The employee is the insured.Question 16: How are issues of ambiguity usually resolved because insurance contracts are contracts of adhesion?
Answer:
in favor of the insured because the insurance company drafts the language in the contract Question 17: A life insurance policy may be returned for cancellation and full refund if it is returned NO later than
Answer:
20 days after receipt by the policyholder.
Question 18: All of the following are ownership rights EXCEPT
Answer:
switching the policy from one insured to another Question 19: Which of the following are defined as a part of the policy and can void the policy if they are breached, whether the breach was intentional or unintentional?
Answer:
warranties
Question 20: Which of the following is an example of a moral hazard?
Answer:
filing a false insurance claim
Question 21: Which of the following is exempted from the incontestability provision in insurance policies?
Answer:
fraudulent misstatements
Question 22: Which whole life policy premium type is the most common?
Answer:
continuous premium Question 23: What type of insurance should a company purchase if it wants to insure the life of its CEO?
Answer:
key person insurance Question 24: Which of the following, by definition, provides benefits for expenses incurred as a result of in-hospital medical treatment and surgery as well as certain outpatient expenses such as doctor's visits, laboratory tests, and diagnostic services?
Answer:
hospitalization insurance Question 25: All of the following are disadvantages to an annually renewable term life policy
EXCEPT
Answer:
the living benefits decrease over time.Question 26: The primary purpose of Health Reimbursement Accounts (HRAs) is to assist
Answer:
covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions.Question 27: All of the following are TRUE regarding incomplete applications EXCEPT
Answer:
the incomplete application can be accepted with the missing information added later.
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