1
PSI LIFE INSURANCE EXAM LATEST/ PSI LIFE
INSURANCE EXAM PREPARATION/PSI LIFE
INSURANCE PRACTICE REAL EXAM 180+
QUESTIONS AND CORRECT ANSWERS|AGRADE
NORATIONALE AND
1.
A prospective life insurance applicant is a 42-year-old married parent
who earns a substantial annual income, has two dependent children,
maintains a mortgage with many years remaining, and wants to ensure
that the family can continue meeting its financial obligations if the
applicant dies unexpectedly. During the initial planning discussion, the
producer explains that life insurance can serve several different purposes
depending on the insured's financial circumstances and the beneficiaries'
anticipated needs. Which of the following best describes the primary
purpose of personally owned life insurance in this situation?
A. To guarantee that the insured will never experience a financial loss
during retirement
B. To provide a death benefit that can help replace lost income and meet
financial obligations after the insured's death
C. To eliminate all federal and state income taxes owed by the insured
during life
D. To guarantee investment returns that are higher than those available
from securities
Answer: B
2.
A producer meets with a married couple who are reviewing their
financial protection because one spouse provides most of the household
income while the other spouse manages childcare and household
responsibilities. The producer explains that determining the appropriate
,2
amount of life insurance should involve consideration of debts, future
income needs, education expenses, final expenses, existing assets, and
other financial resources rather than simply selecting an arbitrary policy
amount. Which approach to determining the amount of life insurance is
most directly based on identifying and quantifying the family's specific
financial needs?
A. Human life value approach
B. Needs analysis approach
C. Replacement-cost depreciation approach
D. Cash-value accumulation approach
Answer: B
3.
A business owner is considering purchasing a life insurance policy on a
key employee whose specialized knowledge and business relationships
are considered extremely valuable to the company. The owner explains
that the employee's unexpected death could cause the company to lose
revenue, incur recruiting and training expenses, and potentially lose
important customers. If the company purchases a policy on the employee
for this purpose, what is the primary business use of the insurance?
A. Key-person protection
B. Estate conservation
C. Mortgage redemption for the employee
D. Personal retirement income replacement
Answer: A
4.
An individual purchases a life insurance policy and names a beneficiary
to receive the policy proceeds upon the insured's death. Unlike a
property insurance policy, the life insurance contract generally does not
attempt to reimburse the beneficiary for a measurable financial loss in
,3
the same manner as property insurance. Which characteristic of a life
insurance contract most appropriately describes this arrangement?
A. Indemnity contract
B. Valued contract
C. Warranty contract
D. Reciprocal contract
Answer: B
5.
A consumer applies for life insurance and provides information
concerning age, occupation, medical history, lifestyle, and other
circumstances that may influence the insurer's assessment of risk. The
insurer evaluates this information before deciding whether to issue the
requested policy and, if so, under what conditions. What insurance
function is being performed?
A. Underwriting
B. Reinsurance
C. Subrogation
D. Salvage
Answer: A
6.
A 28-year-old applicant wants life insurance protection for the next 20
years while establishing a career, paying off student loans, and raising
young children. The applicant does not currently need substantial cash-
value accumulation and is primarily concerned with obtaining a
relatively large death benefit for a specified period at an affordable
premium. Which type of life insurance would most directly meet this
objective?
, 4
A. Whole life insurance
B. Term life insurance
C. Variable universal life insurance
D. Equity-indexed annuity
Answer: B
7.
A policyowner has purchased a permanent life insurance policy under
which premiums are generally payable throughout the insured's lifetime,
subject to the policy's provisions, and the policy accumulates cash value
over time. The policyowner wants predictable premiums and a death
benefit that remains in force as long as the policy requirements are
satisfied. Which type of policy is most consistent with these
characteristics?
A. Level term insurance
B. Whole life insurance
C. Annual renewable term insurance
D. Credit life insurance
Answer: B
8.
A policyowner has a permanent life insurance contract that allows the
policyowner to adjust the amount and timing of premium payments
within contractual limits and also permits changes to the death benefit.
The policy's cash value earns interest under provisions specified in the
contract. Which type of policy is being described?
A. Universal life
B. Straight whole life
C. Decreasing term
D. Limited-pay term
PSI LIFE INSURANCE EXAM LATEST/ PSI LIFE
INSURANCE EXAM PREPARATION/PSI LIFE
INSURANCE PRACTICE REAL EXAM 180+
QUESTIONS AND CORRECT ANSWERS|AGRADE
NORATIONALE AND
1.
A prospective life insurance applicant is a 42-year-old married parent
who earns a substantial annual income, has two dependent children,
maintains a mortgage with many years remaining, and wants to ensure
that the family can continue meeting its financial obligations if the
applicant dies unexpectedly. During the initial planning discussion, the
producer explains that life insurance can serve several different purposes
depending on the insured's financial circumstances and the beneficiaries'
anticipated needs. Which of the following best describes the primary
purpose of personally owned life insurance in this situation?
A. To guarantee that the insured will never experience a financial loss
during retirement
B. To provide a death benefit that can help replace lost income and meet
financial obligations after the insured's death
C. To eliminate all federal and state income taxes owed by the insured
during life
D. To guarantee investment returns that are higher than those available
from securities
Answer: B
2.
A producer meets with a married couple who are reviewing their
financial protection because one spouse provides most of the household
income while the other spouse manages childcare and household
responsibilities. The producer explains that determining the appropriate
,2
amount of life insurance should involve consideration of debts, future
income needs, education expenses, final expenses, existing assets, and
other financial resources rather than simply selecting an arbitrary policy
amount. Which approach to determining the amount of life insurance is
most directly based on identifying and quantifying the family's specific
financial needs?
A. Human life value approach
B. Needs analysis approach
C. Replacement-cost depreciation approach
D. Cash-value accumulation approach
Answer: B
3.
A business owner is considering purchasing a life insurance policy on a
key employee whose specialized knowledge and business relationships
are considered extremely valuable to the company. The owner explains
that the employee's unexpected death could cause the company to lose
revenue, incur recruiting and training expenses, and potentially lose
important customers. If the company purchases a policy on the employee
for this purpose, what is the primary business use of the insurance?
A. Key-person protection
B. Estate conservation
C. Mortgage redemption for the employee
D. Personal retirement income replacement
Answer: A
4.
An individual purchases a life insurance policy and names a beneficiary
to receive the policy proceeds upon the insured's death. Unlike a
property insurance policy, the life insurance contract generally does not
attempt to reimburse the beneficiary for a measurable financial loss in
,3
the same manner as property insurance. Which characteristic of a life
insurance contract most appropriately describes this arrangement?
A. Indemnity contract
B. Valued contract
C. Warranty contract
D. Reciprocal contract
Answer: B
5.
A consumer applies for life insurance and provides information
concerning age, occupation, medical history, lifestyle, and other
circumstances that may influence the insurer's assessment of risk. The
insurer evaluates this information before deciding whether to issue the
requested policy and, if so, under what conditions. What insurance
function is being performed?
A. Underwriting
B. Reinsurance
C. Subrogation
D. Salvage
Answer: A
6.
A 28-year-old applicant wants life insurance protection for the next 20
years while establishing a career, paying off student loans, and raising
young children. The applicant does not currently need substantial cash-
value accumulation and is primarily concerned with obtaining a
relatively large death benefit for a specified period at an affordable
premium. Which type of life insurance would most directly meet this
objective?
, 4
A. Whole life insurance
B. Term life insurance
C. Variable universal life insurance
D. Equity-indexed annuity
Answer: B
7.
A policyowner has purchased a permanent life insurance policy under
which premiums are generally payable throughout the insured's lifetime,
subject to the policy's provisions, and the policy accumulates cash value
over time. The policyowner wants predictable premiums and a death
benefit that remains in force as long as the policy requirements are
satisfied. Which type of policy is most consistent with these
characteristics?
A. Level term insurance
B. Whole life insurance
C. Annual renewable term insurance
D. Credit life insurance
Answer: B
8.
A policyowner has a permanent life insurance contract that allows the
policyowner to adjust the amount and timing of premium payments
within contractual limits and also permits changes to the death benefit.
The policy's cash value earns interest under provisions specified in the
contract. Which type of policy is being described?
A. Universal life
B. Straight whole life
C. Decreasing term
D. Limited-pay term
