PSI Life, Accident, and Health 11-35 Practice
Test
Which type of receipt makes the insurer liable for the risk from the date of application,
regardless of the applicant's insurability?
-Inspection receipt
-temporary receipt
-conditional receipt
-binding receipt ...ANSWER...binding receipt
Which of the following occurs immediately after the application is submitted and the
initial premium is paid?
-the applicant's references
-insurance goes into effect
-the beneficiaries are selected
-the underwriting process begins ...ANSWER...The underwriting process begins
The entire contract includes the actual policy and
-certification of authority
- application
-consideration
-representations ...ANSWER...application
Which of the following is TRUE of a point of service plan?
-A patients care is coordinated by an in-network primary care physician
-a patient may see any provider for any condition for the same cost and does not need
to consult a primary care physician
-patients must submit claim forms for all services received
-the difference in cost between in-network and out-of-network is relatively
small ...ANSWER...A patient may see any provider for any condition for the same cost
and does not need to consult a primary care physician
Which of the following may be thought of as a time deductible rather a dollar deductible
in a disability income policy because benefits are not payable during a time?
,-benefit period
-elimination period
-probationary period
-grace period ...ANSWER...Elimination Period
What is the maximum amount of time the insured has to file legal action against the
insurer?
-10 years
-3 years
-5 years
-1 year ...ANSWER...3 years
How are issues of ambiguity usually resolved because insurance contracts are
contracts to adhesion?
-in favor of the insured because the insurance company drafts the language
-in favor of the insurer because most issues arise from misrepresentation on the part of
the insured
-in favor of the insurer because the insured frequently does not adherer to the
requirements of the contract
-in favor of the insured because insurance companies often do not adhere to the more
specific contract principles ...ANSWER...In favor of the insured because the insurance
company drafts the language in the contract.
Which of the following is considered the major advantage of HIPPA?
-tax deductible of certain medical expenses
-increased coverage
-portability
-qualified beneficiaries ...ANSWER...Portability
When does insurable interest come into play in a life insurance policy?
-When the applicant for the policy is not insured
- when the free look period ends
-when a beneficiary is irrevocable
-when the charity is named beneficiary of the policy ...ANSWER...When the applicant
for the policy is not the insured
Replacement refers to which of the following?
-Replacing the original policy with a copy
-replacing an existing policy with a new one
-replacing one insured with another
,-replacing a beneficiary ...ANSWER...Replacing an existing policy with a new one
How many months can a life insurance policy normally be backed from the date of
application?
-1 month
-3 months
-6 months
-12 months ...ANSWER...6 months
How are term riders used?
-To extend the effective dates of coverage
-to purchase insurance on a family member of the originally insured
-to purchase term insurance attached to supplement another life insurance policy
-to substitute the term of the coverage ...ANSWER...to purchase insurance on a family
member of the originally insured
In which of the following cases are premiums paid by business, not tax deductible as a
business expense?
-key person disability income insurance
-when benefits received by employees are taxable as income
-individual disability income coverage for its employees
-group disability income coverage for its employees. ...ANSWER...Key person disability
income insurance
Whose responsibility is it to make sure that the company is notified of a death claim at
the earliest opportunity (in most cases)
-The insured
-The producer
-The funeral director
-The insured's estate ...ANSWER...The producer
The group conversion option is allowed all of the following EXCEPT:
-Loss of group coverage due to termination of employment
-Termination of master policy
-Upon the loss of eligibility on the part of a class of insureds
-During the annual Benefits enrollment period ...ANSWER...During the annual Benefit
enrollment period
The group conversion option is allowed for all of the following EXCEPT:
-loss of group coverage due to termination of employment
, -termination of the master policy
-upon the loss of eligibility on the part of a class of insureds
-during the annual benefits enrollment period ...ANSWER...during the annual benefits
enrollment period
What is the order in which beneficiaries receive proceeds from a life insurance policy?
-classification of beneficiaries
-progression of beneficiares
-line of beneficiaries
-succession of beneficiaries ...ANSWER...succession of beneficiaries
Which type of coverage pays the operating costs of a small business when the owner
becomes disabled?
-Individual expense disability
- buy-sell expense disability insurance
-key person expense disability insurance
-business overhead expense disability insurance ...ANSWER...business overhead
expense disability insurance
What is a return of premium rider?
-an increasing amount of term insurance that equals the total of premiums paid up to
the current point
-a provision that states the insurer must return any premiums paid during the free-look
period
-a provision that allows the insured to cancel the policy in the first two years and have
premiums refunded
-an increasing amount of term insurance that equals the cash value of the policy at any
point in time. ...ANSWER...an increasing amount of term insurance that equals the total
of premiums paid up to the current point
All of the following are disadvantages to an annually renewable term life policy EXCEPT
-the insured may be left with inadequate protection when it is most needed
- it generally is not renewable beyond a certain age
-it becomes considerably more expensive over time
-the living benefits decrease over time ...ANSWER...the living benefits decrease over
time
What are two characteristics of Health Maintenance Organization (HMOs)?
-containing costs and treating advanced stage illnesses
- treating advanced stage illnesses and pre-existing conditions
-containing costs and early treatment
Test
Which type of receipt makes the insurer liable for the risk from the date of application,
regardless of the applicant's insurability?
-Inspection receipt
-temporary receipt
-conditional receipt
-binding receipt ...ANSWER...binding receipt
Which of the following occurs immediately after the application is submitted and the
initial premium is paid?
-the applicant's references
-insurance goes into effect
-the beneficiaries are selected
-the underwriting process begins ...ANSWER...The underwriting process begins
The entire contract includes the actual policy and
-certification of authority
- application
-consideration
-representations ...ANSWER...application
Which of the following is TRUE of a point of service plan?
-A patients care is coordinated by an in-network primary care physician
-a patient may see any provider for any condition for the same cost and does not need
to consult a primary care physician
-patients must submit claim forms for all services received
-the difference in cost between in-network and out-of-network is relatively
small ...ANSWER...A patient may see any provider for any condition for the same cost
and does not need to consult a primary care physician
Which of the following may be thought of as a time deductible rather a dollar deductible
in a disability income policy because benefits are not payable during a time?
,-benefit period
-elimination period
-probationary period
-grace period ...ANSWER...Elimination Period
What is the maximum amount of time the insured has to file legal action against the
insurer?
-10 years
-3 years
-5 years
-1 year ...ANSWER...3 years
How are issues of ambiguity usually resolved because insurance contracts are
contracts to adhesion?
-in favor of the insured because the insurance company drafts the language
-in favor of the insurer because most issues arise from misrepresentation on the part of
the insured
-in favor of the insurer because the insured frequently does not adherer to the
requirements of the contract
-in favor of the insured because insurance companies often do not adhere to the more
specific contract principles ...ANSWER...In favor of the insured because the insurance
company drafts the language in the contract.
Which of the following is considered the major advantage of HIPPA?
-tax deductible of certain medical expenses
-increased coverage
-portability
-qualified beneficiaries ...ANSWER...Portability
When does insurable interest come into play in a life insurance policy?
-When the applicant for the policy is not insured
- when the free look period ends
-when a beneficiary is irrevocable
-when the charity is named beneficiary of the policy ...ANSWER...When the applicant
for the policy is not the insured
Replacement refers to which of the following?
-Replacing the original policy with a copy
-replacing an existing policy with a new one
-replacing one insured with another
,-replacing a beneficiary ...ANSWER...Replacing an existing policy with a new one
How many months can a life insurance policy normally be backed from the date of
application?
-1 month
-3 months
-6 months
-12 months ...ANSWER...6 months
How are term riders used?
-To extend the effective dates of coverage
-to purchase insurance on a family member of the originally insured
-to purchase term insurance attached to supplement another life insurance policy
-to substitute the term of the coverage ...ANSWER...to purchase insurance on a family
member of the originally insured
In which of the following cases are premiums paid by business, not tax deductible as a
business expense?
-key person disability income insurance
-when benefits received by employees are taxable as income
-individual disability income coverage for its employees
-group disability income coverage for its employees. ...ANSWER...Key person disability
income insurance
Whose responsibility is it to make sure that the company is notified of a death claim at
the earliest opportunity (in most cases)
-The insured
-The producer
-The funeral director
-The insured's estate ...ANSWER...The producer
The group conversion option is allowed all of the following EXCEPT:
-Loss of group coverage due to termination of employment
-Termination of master policy
-Upon the loss of eligibility on the part of a class of insureds
-During the annual Benefits enrollment period ...ANSWER...During the annual Benefit
enrollment period
The group conversion option is allowed for all of the following EXCEPT:
-loss of group coverage due to termination of employment
, -termination of the master policy
-upon the loss of eligibility on the part of a class of insureds
-during the annual benefits enrollment period ...ANSWER...during the annual benefits
enrollment period
What is the order in which beneficiaries receive proceeds from a life insurance policy?
-classification of beneficiaries
-progression of beneficiares
-line of beneficiaries
-succession of beneficiaries ...ANSWER...succession of beneficiaries
Which type of coverage pays the operating costs of a small business when the owner
becomes disabled?
-Individual expense disability
- buy-sell expense disability insurance
-key person expense disability insurance
-business overhead expense disability insurance ...ANSWER...business overhead
expense disability insurance
What is a return of premium rider?
-an increasing amount of term insurance that equals the total of premiums paid up to
the current point
-a provision that states the insurer must return any premiums paid during the free-look
period
-a provision that allows the insured to cancel the policy in the first two years and have
premiums refunded
-an increasing amount of term insurance that equals the cash value of the policy at any
point in time. ...ANSWER...an increasing amount of term insurance that equals the total
of premiums paid up to the current point
All of the following are disadvantages to an annually renewable term life policy EXCEPT
-the insured may be left with inadequate protection when it is most needed
- it generally is not renewable beyond a certain age
-it becomes considerably more expensive over time
-the living benefits decrease over time ...ANSWER...the living benefits decrease over
time
What are two characteristics of Health Maintenance Organization (HMOs)?
-containing costs and treating advanced stage illnesses
- treating advanced stage illnesses and pre-existing conditions
-containing costs and early treatment
