PSI LIFE COMPREHENSIVE EXAM 2026/2027 QUESTIONS
AND SOLUTIONS RATED A+
✔✔What does a limited payment whole life policy provide? - ✔✔Life time protection
✔✔Loans may generally be obtained against the cash value of a personal life insurance
policy and policy loan proceeds - ✔✔Are not treated as taxable income
✔✔The insurance commissioner has the right to issue which of the following orders? -
✔✔Compliance
✔✔The purpose of the replacement regulation is to - ✔✔Protect intermediaries from
lawsuits filed by insureds
✔✔Under an executive bonus plan, if the employee takes loans from the insurance
policy, the funds are: - ✔✔Reported as taxable income to the employee
✔✔Which is the name of the policy that combines a universal life policy with investment
choices? - ✔✔Variable universal life policy
✔✔What BEST describes a limited pay life insurance policy? - ✔✔a whole life insurance
policy where the premiums are paid up after 20 years
✔✔In order to be insured, you must have a chance of financial loss or financial interest.
This is called an - ✔✔Insurable interest
✔✔An individual who is NOT acceptable by an insurer at standard rates because of
health, habits, or occupation is called a - ✔✔Substandard Risk
✔✔An example of a risk that is NOT a pure risk would be - ✔✔injury in an accident
✔✔An applicant would be charged a higher premium for a life insurance policy if they
were - ✔✔Older
✔✔A payor benefit rider would be found on which type of policy? - ✔✔A juvenile life
policy
✔✔Under the children term rider, what occurs when a child reaches the specified age?
He or she - ✔✔is eliminated from coverage
✔✔A person who intentionally commits a criminal violation of an insurance law may be
subject to a MAXIMUM fine of - ✔✔$5,000
, ✔✔Which of the following is NOT a settlement option for life policies? - ✔✔extended
term
✔✔ What kind of retirement plan can a 75-employee for profit corporation establish? -
✔✔Simple IRA
✔✔The taxable portion of a monthly income benefit paid during the annuity phase from
a nonqualified annuity is calculated using the - ✔✔Exclusion ratio
✔✔Unfair claims settlement methods and practices by an insurance company include
all of the following acts EXCEPT - ✔✔failure to pay all claims that are reported within 90
days after a loss occurs
✔✔The settlement option that allows proceeds to remain with the insurer and the
earnings to be paid to the beneficiary on a monthly basis is called - ✔✔Interest only
✔✔Regulations on life insurance advertising apply to which of the following insurance
company materials? - ✔✔A radio commercial that promotes the benefits of a specific
company's life insurance products
✔✔An insurance company may contest a life policy within a MAXIMUM of how many
years after the policy's effective date? - ✔✔2
✔✔All of the following factors are used in life insurance premium determination
EXCEPT - ✔✔Morbidity
✔✔The authorization used to obtain the applicant's medical information that will be used
by the insurer for the primary purpose of determining eligibility must include: - ✔✔the
time frame in which the insurer must release the eligibility decision to the agent
✔✔An intermediary who omits information on an insurance application without the
applicant's knowledge and submits the application to the insurer may be guilty of: -
✔✔Misrepresentation
✔✔Dividends are NOT subject to taxation because - ✔✔Paying dividends is equivalent
to returning a premium
✔✔The XYZ Insurance Company cancels an intermediary's contract. XYZ could be
bound by the intermediary's later acts if it: - ✔✔Continues to pay the intermediary
deferred commissions
✔✔Which of the following products is designed to pay benefits that can provide a
stream of retirement income to the purchaser? - ✔✔tax-deferred growth
AND SOLUTIONS RATED A+
✔✔What does a limited payment whole life policy provide? - ✔✔Life time protection
✔✔Loans may generally be obtained against the cash value of a personal life insurance
policy and policy loan proceeds - ✔✔Are not treated as taxable income
✔✔The insurance commissioner has the right to issue which of the following orders? -
✔✔Compliance
✔✔The purpose of the replacement regulation is to - ✔✔Protect intermediaries from
lawsuits filed by insureds
✔✔Under an executive bonus plan, if the employee takes loans from the insurance
policy, the funds are: - ✔✔Reported as taxable income to the employee
✔✔Which is the name of the policy that combines a universal life policy with investment
choices? - ✔✔Variable universal life policy
✔✔What BEST describes a limited pay life insurance policy? - ✔✔a whole life insurance
policy where the premiums are paid up after 20 years
✔✔In order to be insured, you must have a chance of financial loss or financial interest.
This is called an - ✔✔Insurable interest
✔✔An individual who is NOT acceptable by an insurer at standard rates because of
health, habits, or occupation is called a - ✔✔Substandard Risk
✔✔An example of a risk that is NOT a pure risk would be - ✔✔injury in an accident
✔✔An applicant would be charged a higher premium for a life insurance policy if they
were - ✔✔Older
✔✔A payor benefit rider would be found on which type of policy? - ✔✔A juvenile life
policy
✔✔Under the children term rider, what occurs when a child reaches the specified age?
He or she - ✔✔is eliminated from coverage
✔✔A person who intentionally commits a criminal violation of an insurance law may be
subject to a MAXIMUM fine of - ✔✔$5,000
, ✔✔Which of the following is NOT a settlement option for life policies? - ✔✔extended
term
✔✔ What kind of retirement plan can a 75-employee for profit corporation establish? -
✔✔Simple IRA
✔✔The taxable portion of a monthly income benefit paid during the annuity phase from
a nonqualified annuity is calculated using the - ✔✔Exclusion ratio
✔✔Unfair claims settlement methods and practices by an insurance company include
all of the following acts EXCEPT - ✔✔failure to pay all claims that are reported within 90
days after a loss occurs
✔✔The settlement option that allows proceeds to remain with the insurer and the
earnings to be paid to the beneficiary on a monthly basis is called - ✔✔Interest only
✔✔Regulations on life insurance advertising apply to which of the following insurance
company materials? - ✔✔A radio commercial that promotes the benefits of a specific
company's life insurance products
✔✔An insurance company may contest a life policy within a MAXIMUM of how many
years after the policy's effective date? - ✔✔2
✔✔All of the following factors are used in life insurance premium determination
EXCEPT - ✔✔Morbidity
✔✔The authorization used to obtain the applicant's medical information that will be used
by the insurer for the primary purpose of determining eligibility must include: - ✔✔the
time frame in which the insurer must release the eligibility decision to the agent
✔✔An intermediary who omits information on an insurance application without the
applicant's knowledge and submits the application to the insurer may be guilty of: -
✔✔Misrepresentation
✔✔Dividends are NOT subject to taxation because - ✔✔Paying dividends is equivalent
to returning a premium
✔✔The XYZ Insurance Company cancels an intermediary's contract. XYZ could be
bound by the intermediary's later acts if it: - ✔✔Continues to pay the intermediary
deferred commissions
✔✔Which of the following products is designed to pay benefits that can provide a
stream of retirement income to the purchaser? - ✔✔tax-deferred growth
