PSI EXAM QUESTIONS AND ANSWERS (2022/2023) (VERIFIED SOLUTIONS)

PSI EXAM QUESTIONS AND ANSWERS (2022/2023) (VERIFIED SOLUTIONS) During which period of a Disability Income Policy is coverage effective but during which no benefits will be paid under the policy? Probationary period All of the following are common exclusions from loss found in disability income policies EXCEPT for that incurred while commiting a misdemeanor What is the primary advantage for obtaining a reinstatement of a policy rather than obtaining a new one? insured original issue age is used How does a noncancelable policy differ from a guaranteed renewable policy? With the noncancelable policy the insurer may increase premiums only based on the terms of the policy. What does first dollar coverage mean? As soon as covered medical expenses are incurred, the policy begins to pay. What is the maximum amount of time the insured has to file legal action against the insurer after written proof of loss is provided? 3 years What is a MIB report? medical information on an applicant for assessing life or health insurance risk All of the following are TRUE regarding incomplete applications EXCEPT the incomplete application can be accepted with the missing information added later. hy are insurance policies considered conditional contracts? Certain conditions need to be met to make the contract legally enforceable. When does insurable interest come into play in a life insurance policy? when the applicant for the policy is not the insured Which type of receipt makes the insurer liable for the risk from the date of application, regardless of the applicant's insurability? binding receipt What specific new procedures does the USA Patriot Act require of insurance companies? Establish an anti-money laundering program What is the purpose of Stranger-originated life insurance (STOLI)? he policy is originated primarily or solely for the purpose of resale How do warranties differ from representations? a warranty is guaranteed to be true, a representation is believed to be true to the best of one's knowledge. Obtaining consumer information reports under false pretenses is prosecutable by which of the following? Fair Credit Reporting Act Which of the following was specifically designed to address STOLI and IOLI practices? NCOIL Act Which of the following occurs immediately after the application is submitted and the initial premium paid? the underwriting process begins A consumer report used to determine eligibility for insurance may include all of the following EXCEPT medical underwriting exam For an individual long-term care policy there is an annual dollar limit for tax deductions that is based on which of the following? age 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. In noncontributory plans, which percentage of eligible members must participate? 100% When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax? hen the taxpayer's medical expenses exceed 7.5% of adjusted gross income during a taxable year Short term disability insurance generally only covers injuries due to which of the following? Non-occupational injuries Managed care plans increase efficiency by all of the following means EXCEPT transferring the management of costs to the insureds. Why is rehabilitation considered worthy of federal help under workers' compensation? it reduces insurance losses and helps regain the worker's dignity What type of insurance should a company purchase if it wants to insure the life of its CEO? key person insurance The group conversion option is allowed for all of the following EXCEPT during the annual benefits enrollment period All of the following are tax qualified retirement plans EXCEPT Section 529 plan Why is relying solely on employer group life insurance generally considered inadequate for most individual's needs? It is financially insufficient to cover end of life expenses Which of the following is characteristic of a nonqualified plan? plan does NOT meet federal guidelines for tax benefits How long after being entitled to disability benefits will an individual be eligible to receive Medicare benefits? 2 years All of the following are requirements to qualify for Social Security disability benefits EXCEPT when unable to work in occupation in which the worker was trained or educated. In a home healthcare benefit, all of the following are eligible expenses EXCEPT blood transfusions Which of the following amends the Social Security Act to make Medicare secondary to group health plans? TEFRA Which type of life policy can be continued year after year without a required medical examination but rates are dependent on the insured's current age? renewable term Which of the following is TRUE of the limited pay whole life policy? Coverage continues after the policy is paid-up. Which of the following is true about a decreasing term life policy? The face amount reaches zero at policy expiration. Which of the following is defined as the dollar amount beyond which the insured no longer participates in payment of medical expenses? Stop Loss Limit When should a buy-sell agreement include a provision for the buy-out of an owner's business interest in the event of a disability? When there is a buy-sell agreement funded with life insurance to buyout the interest of a deceased owner or partner. Which of the following is TRUE of an equity-indexed annuity? It has a guaranteed minimum interest rate. Which insurance plans are commonly offered through the worksite (employer sponsored) EXCEPT? Medicare Current assumption whole life policies are sensitive to which of the following? interest rates Which is the primary purpose of Health Reimbursement Accounts (HRAs)? To assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions. 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 A group conversion option may be used in all the following instances EXCEPT a life-changing event, such as marriage, divorce, or childbirth. Which of the following coverage types pays a monthly cash benefit following the elimination period for total disability due to accident or sickness? Disability Income Insurance All of the following are characteristics of variable whole life EXCEPT there is no guaranteed minimum death benefit Which problem was universal life insurance designed to address? low interest rates during periods of high inflation Which of the following is the most common method to supplement Medicare coverage? coverage offered by private insurers Which of the following is covered by a dread disease policy? illnesses that do not occur frequently but incur significant costs when they do occur Which of the following is a characteristic of Preferred Provider Organizations (PPOs)? prearranged costs for services rendered In which of the following does a covered employee agree to a reduction in compensation so the amount can be used to cover medical expenses? Flexible Spending Account (FSA) Which of the following policy types is considered double indemnity? accidental death Which of the following is TRUE for a flexible premium annuity? The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount. Compared to basic hospital, medical and surgical policies, which type of insurance provides broader coverage, fewer gaps, higher individual benefits, and higher policy maximums? major medical insurance All of the following are characteristics of COBRA EXCEPT change in medical privacy procedures All of the following are nonforfeiture options EXCEPT Cash dividend option Which of the following must be given to the insurer within 20 days after occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible? notice of claim How might someone cover the extra expenses of child care and home-related costs? purchasing family term insurance All of the following are features of the spendthrift clause EXCEPT the beneficiary may encumber the proceeds Whose responsibility is it to make sure that the company is notified of a death claim at the earliest possible opportunity (in most cases)? the producer 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 What type of life policy can be continued year after year without a required medical examination but rates are dependent on the insured's current age? renewable term One of the differences between group underwriting an individual underwriting is that there is little or no medical information required regarding plan participants in groups of ` 50 or more Which of the following term insurance types provides temporary protection that can be changed to some type of permanent protection without evidence of insurability? convertible Which annuity settlement option provides a stated monthly amount to the annuitant and upon the annuitant's death the same or a lesser amount paid for the lifetime of the survivor? Joint and Survivorship Which one of the following is particularly important for an insurance producer to explain to a client upon delivery of a life insurance policy? ANY exclusions All of the following are ownership rights EXCEPT switching the policy from one insured to another Which of the following is TRUE regarding assignment rights for irrevocable beneficiaries? They are MORE likely to receive a loan based on the expectations of the proceeds. Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying investment account? variable Which part of an insurance contract contains the promise to pay losses covered by the policy in exchange for the insured's premium and compliance with policy terms? insuring clause An insured and the beneficiary are both killed in a fatal accident. Which provision presumes the insured survived the beneficiary? common disaster clause All life insurance and health insurance contracts contain all of the following EXCEPT A) conditions B) Insuring clause C) Policy face D) REPRESENTATION* Which of the following is common in an increasing term life policy? it begins with little or no insurance protection Which of the following is the time limit on certain defenses after which the policy becomes incontestable? 2 years Which whole life policy premium type is the most common? continuous premium In a level term life policy, which ALWAYS remains constant? death benefit In order to AVOID being classified as an MEC, a policy must pass which of the following? 7-Pay Test Which of the following lists the three common types of permanent individual life insurance? A) Universal Life, AD&D, Term Life B) Group Life, Whole Life, Variable Life C) Whole life, Incidental Life, Term Life D) Variable Life, Whole Life, Universal Life**** Which of the following refers to how often a premium is paid? A) net B) level C) ratio D) mode*** hich 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 Which policy type is backed by equity investments and allows the policyholder to adjust the death benefit? A) term life B) variable universal life*** C) regular whole life D) variable life ow does the per capita rule apply to proceeds from a life insurance policy? A) The proceeds go to the policyholder's estate when no beneficiary is living. B) The proceeds are divided equally among living primary beneficiaries.*** C) The secondary beneficiary receives the proceeds if the primary beneficiary is no longer living. D) The proceeds go to the descendants of the primary beneficiaries.