PSI EXAM QUESTIONS AND ANSWERS (VERIFIED SOLUTIONS

PSI EXAM QUESTIONS AND ANSWERS (VERIFIED SOLUTIONS What does first dollar coverage mean? - ANSWER -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? - ANSWER -3 years What is a MIB report? - ANSWER -medical information on an applicant for assessing life or health insurance risk All of the following are TRUE regarding incomplete applications EXCEPT - ANSWER - the incomplete application can be accepted with the missing information added later. hy are insurance policies considered conditional contracts? - ANSWER -Certain conditions need to be met to make the contract legally enforceable. When does insurable interest come into play in a life insurance policy? - ANSWER - 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? - ANSWER -binding receipt What specific new procedures does the USA Patriot Act require of insurance companies? - ANSWER -Establish an anti-money laundering program What is the purpose of Stranger-originated life insurance (STOLI)? - ANSWER -he policy is originated primarily or solely for the purpose of resale How do warranties differ from representations? - ANSWER -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? - ANSWER -Fair Credit Reporting Act Which of the following was specifically designed to address STOLI and IOLI practices? - ANSWER -NCOIL Act Which of the following occurs immediately after the application is submitted and the initial premium paid? - ANSWER -the underwriting process begins A consumer report used to determine eligibility for insurance may include all of the following EXCEPT - ANSWER -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? - ANSWER -age Under which situation must insurable interest exist between the applicant and insured at the time of application? - ANSWER -When a third-party applicant names themselves beneficiary. In noncontributory plans, which percentage of eligible members must participate? - ANSWER -100% When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax? - ANSWER -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? - ANSWER -Non-occupational injuries Managed care plans increase efficiency by all of the following means EXCEPT - ANSWER -transferring the management of costs to the insureds. Why is rehabilitation considered worthy of federal help under workers' compensation? - ANSWER -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? - ANSWER -key person insurance The group conversion option is allowed for all of the following EXCEPT - ANSWER - during the annual benefits enrollment period All of the following are tax qualified retirement plans EXCEPT - ANSWER -Section 529 plan Why is relying solely on employer group life insurance generally considered inadequate for most individual's needs? - ANSWER -It is financially insufficient to cover end of life expenses Which of the following is characteristic of a nonqualified plan? - ANSWER -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? - ANSWER -2 years All of the following are requirements to qualify for Social Security disability benefits EXCEPT when - ANSWER -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 - ANSWER -blood transfusions Which of the following amends the Social Security Act to make Medicare secondary to group health plans? - ANSWER -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? - ANSWER - renewable term Which of the following is TRUE of the limited pay whole life policy? - ANSWER - Coverage continues after the policy is paid-up. Which of the following is true about a decreasing term life policy? - ANSWER -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? - ANSWER -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? - ANSWER -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? - ANSWER -It has a guaranteed minimum interest rate. Which insurance plans are commonly offered through the worksite (employer sponsored) EXCEPT? - ANSWER -Medicare Current assumption whole life policies are sensitive to which of the following? - ANSWER -interest rates Which is the primary purpose of Health Reimbursement Accounts (HRAs)? - ANSWER -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? - ANSWER -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 - ANSWER -a life-changing event, such as marriage, divorce, or childbirth.