Page 1 of 109
PSI LIFE INSURANCE EXAM ALL 400+ QUESTIONS
AND DETAILED SOLUTIONS LATEST UPDATE THIS
YEAR
PSI LIFE INSURANCE EXAM
QUESTION: Under the misstatement of age provision, what happens if it is determined at death
that the insured's age or gender was misstated on a life insurance policy application?
a) benefits are adjusted to an amount that the premium would have purchased at the correct
age or gender
b) if the death is two years after original police purchase, complete benefits are paid
c) the proceeds of the policy must be determined by a probate court proceeding
d) the application is considered fraudulent and no benefits are paid - ANSWER-a) benefits are
adjusted to an amount that the premium would have purchased at the correct age or gender
QUESTION: In an adjustable life policy, all of the following are adjustable by the policy holder
EXCEPT:
a) length of protection
b) interest rate
c) the premium
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,Page 2 of 109
d) the face amount - ANSWER-b) interest rate
QUESTION: If the insurer wishes to share an applicant's HIV status, the applicant must be given
full notice of all of the following EXCEPT:
a) an opportunity to refuse the dissemination of the information
b) the applicant's rights to maintain privacy
c) the treatment procedures that are covered by the policy
d) insurer's practices with respect to the treatment of this information - ANSWER-c) the
treatment procedures that are covered by the policy
QUESTION: Which of the following is TRUE regarding assignment rights for irrevocable
beneficiaries?
a) they are responsible for premium payment when the policyholder fails to pay
b) they can be changed without the beneficiary's consent after a life changing event
c) they are MORE likely to receive a loan based on the expectations of the proceeds
d) they are LESS likely to receive a loan based on the expectations of the proceeds - ANSWER-c)
they are MORE likely to receive a loan based on the expectations of the proceeds
Which type of assignment occurs when a person transfers ownership of a life insurance policy
to another person, such as a son when turning 18?
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,Page 3 of 109
a) permanent
b) contractual
c) binding
d) collateral - ANSWER-a) permanent
QUESTION: In which of the following cases are premiums paid by a business NOT tax deductible
as a business expense?
a) group disability income coverage for its employees
b) individual disability income coverage for its employees
c) when benefits received by employees are taxable as income
d) key person disability income insurance - ANSWER-d) key person disability income insurance
QUESTION: What is a MIB report?
a) credit information on an applicant used in the underwriting process
b) information on an applicant's moral character collected from interviews of associates
c) medical information on an applicant for assessing life or health insurance risk
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, Page 4 of 109
d) information on an applicant's medical condition collected via a physician's physical
examination - ANSWER-c) medical information on an applicant for assessing life or health
insurance risk
QUESTION: In a level term policy, which ALWAYS remains constant?
a) beneficiary
b) death benefit
c) premium
d) minimum age of the insured - ANSWER-b) death benefit
QUESTION: Which is a common approach to addressing the problems inherent in naming a
minor as a beneficiary to a life insurance policy?
a) naming the estate as the beneficiary
b) establishing a trust to administer proceeds
c) using contingent beneficiaries
d) using class designations - ANSWER-b) establishing a trust to administer proceeds
4
PSI LIFE INSURANCE EXAM ALL 400+ QUESTIONS
AND DETAILED SOLUTIONS LATEST UPDATE THIS
YEAR
PSI LIFE INSURANCE EXAM
QUESTION: Under the misstatement of age provision, what happens if it is determined at death
that the insured's age or gender was misstated on a life insurance policy application?
a) benefits are adjusted to an amount that the premium would have purchased at the correct
age or gender
b) if the death is two years after original police purchase, complete benefits are paid
c) the proceeds of the policy must be determined by a probate court proceeding
d) the application is considered fraudulent and no benefits are paid - ANSWER-a) benefits are
adjusted to an amount that the premium would have purchased at the correct age or gender
QUESTION: In an adjustable life policy, all of the following are adjustable by the policy holder
EXCEPT:
a) length of protection
b) interest rate
c) the premium
1
,Page 2 of 109
d) the face amount - ANSWER-b) interest rate
QUESTION: If the insurer wishes to share an applicant's HIV status, the applicant must be given
full notice of all of the following EXCEPT:
a) an opportunity to refuse the dissemination of the information
b) the applicant's rights to maintain privacy
c) the treatment procedures that are covered by the policy
d) insurer's practices with respect to the treatment of this information - ANSWER-c) the
treatment procedures that are covered by the policy
QUESTION: Which of the following is TRUE regarding assignment rights for irrevocable
beneficiaries?
a) they are responsible for premium payment when the policyholder fails to pay
b) they can be changed without the beneficiary's consent after a life changing event
c) they are MORE likely to receive a loan based on the expectations of the proceeds
d) they are LESS likely to receive a loan based on the expectations of the proceeds - ANSWER-c)
they are MORE likely to receive a loan based on the expectations of the proceeds
Which type of assignment occurs when a person transfers ownership of a life insurance policy
to another person, such as a son when turning 18?
2
,Page 3 of 109
a) permanent
b) contractual
c) binding
d) collateral - ANSWER-a) permanent
QUESTION: In which of the following cases are premiums paid by a business NOT tax deductible
as a business expense?
a) group disability income coverage for its employees
b) individual disability income coverage for its employees
c) when benefits received by employees are taxable as income
d) key person disability income insurance - ANSWER-d) key person disability income insurance
QUESTION: What is a MIB report?
a) credit information on an applicant used in the underwriting process
b) information on an applicant's moral character collected from interviews of associates
c) medical information on an applicant for assessing life or health insurance risk
3
, Page 4 of 109
d) information on an applicant's medical condition collected via a physician's physical
examination - ANSWER-c) medical information on an applicant for assessing life or health
insurance risk
QUESTION: In a level term policy, which ALWAYS remains constant?
a) beneficiary
b) death benefit
c) premium
d) minimum age of the insured - ANSWER-b) death benefit
QUESTION: Which is a common approach to addressing the problems inherent in naming a
minor as a beneficiary to a life insurance policy?
a) naming the estate as the beneficiary
b) establishing a trust to administer proceeds
c) using contingent beneficiaries
d) using class designations - ANSWER-b) establishing a trust to administer proceeds
4
