PSI Insurance Exam Latest Updated 2025

What is it called when a life insurance policy pays a multiple of the coverage amount when certain types of accidents occur? - -multiple indemnity Upon the issuance of a conditional receipt for a renewal when the premium is paid AFTER the time granted by the insurer, what is the maximum amount of time for reinstatement of the policy? - -30 days Which of the following statements regarding a pure life annuity payout option is correct? - -This option provides the highest monthly income. Which of the following does not apply to the time limit on certain defenses provision in health insurance policies? - -fraudulent misstatements If an individual is insured by both their own health insurance policy and their spouse's policy, which policy pays first in the event of an illness? - -The individual's policy pays first, the spouse's policy pays the remaining up to coverage amount. When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax? - -when the taxpayer's unreimbursed medical expenses exceed 7.5% of adjusted gross income during a taxable year When the suicide clause is inserted in a life insurance contract, death by suicide is not covered during the policy's initial - -2 year period. Which of the following is a characteristic of Health Maintenance Organizations (HMOs)? - -preventive care The life insurance policy will not be truly effective until all of the following occur EXCEPT - -the producer has explained the policy to the client. Under which situation must insurable interest exist between the applicant and insured at the time of application? - -when a third-party applicant names themselves beneficiary Which of the following is a distinguishing feature of a variable life insurance policy? - The cash value earnings are based on the performance of the separate account. The person who receives the benefit of an annuity is known as the - -annuitant. Which of the following is an example of a premium payment mode? - -annual premium payment INSURANCE INSURANCE How do most disability policies handle the case of a recurrent disability occurring at least 90 days after the first claim? - -it must be handled as a new claim for a new period of disability, requiring a new elimination period. Which of the following is true for most comprehensive dental policies? - -Routine care is provided without coinsurance or deductibles. Under a Medicare Supplement Policy, preexisting conditions CANNOT be excluded after how many months from the effective date of the policy? - -6 months What does an application for insurance contractually represent for the insured? - -an offer Which of the following is exempted from the incontestability provision in insurance policies? - -fraudulent misstatements 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? - -elimination period How long after being entitled to Social Security disability benefits will an individual be eligible to receive Medicare benefits? - -2 years If a policy is determined to be a Modified Endowment Contract (MEC), funds received under the policy will be - -considered taxable income first. Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying investment account? - -variable What is a MIB report? - -medical information on an applicant for assessing life or health insurance risk Group Life Policies typically include which of the following provisions? - -conversion privilege In a case where an individual's health is insured by both their own policy and their spouse's policy, which policy pays in the event of an illness? - -The individual's policy pays first, the spouse's policy pays the remaining up to coverage amount. The feature of a Life Insurance Policy stating that the policy will NOT cover certain risks is known as - -exclusion. The primary purpose of Health Reimbursement Accounts (HRAs) is to assist - -covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions. INSURANCE INSURANCE What type of insurance should a company purchase if it wants to insure the life of its CEO? - -key person insurance Which is the major reason why long term care insurance is becoming increasingly important? - -As life expectancy increases, the chances of needing long term care also increase. 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? - -precertification provision Which policy provision permits the policyowner to take a specified number of days to examine the contract, and allows for cancellation and a full refund if the policyowner rejects the terms or costs? - -free look A life insurance policy may be returned for cancellation and full refund if it is returned NO later than - -20 days after receipt by the policyholder. Which of the following features makes Universal Life Insurance different from other forms of Whole Life Insurance? - -premium schedules Which of the following is TRUE in a key employee life insurance policy? - -The corporation is the applicant and policy holder. The employee is the insured. How are issues of ambiguity usually resolved because insurance contracts are contracts of adhesion? - -in favor of the insured because the insurance company drafts the language in the contract Which of the following is a characteristic of indexed universal life insurance? - -A portion of the cash value is tied to an equity index account linked to a stipulated stock index. Managed care plans increase efficiency by all of the following means EXCEPT - transferring the management of costs to the insureds. Which type of policy allows the policyowner the option to change the face value, amount of premium, length of coverage, and type of coverage without changing policies? - adjustable life Which of the following policy loans is a provision in which an amount equal to the premium due is subtracted from the cash value to pay the premium and prevent a lapse of the policy? - -automatic premium loan All of the following are ownership rights EXCEPT - -switching the policy from one insured to another INSURANCE INSURANCE Which of the following describes a jumping juvenile policy? - -The face amount increases up to five times the original face amount when the insured reaches a specified age. All of the following are required signatures on a life insurance application EXCEPT - -the minor in a juvenile policy. What is the tax advantage of a non-qualified annuity? - -Growth is tax deferred. Under an individual policy, an insured who CANNOT perform the duties of his/her own occupation for a specific period of time is - -totally disabled. A few small employers in the same industry join together to become eligible for group insurance. The type of health insurance they have created for each other is known as - Multiple Employer Trust (MET). Which of the following is an example of a moral hazard? - -filing a false insurance claim According to the time of payment of claims provision, the insurer must make the payment immediately after receiving proof of loss EXCEPT - -for claims involving periodic payments. When are dividends paid from a participating policy considered taxable? - -when the amount received exceeds the total amount of premiums paid for the policy Which whole life policy premium type is the most common