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PSI LIFE INSURANCE EXAM QUESTIONS
What is the maximum amount of time the insured has to file
AND ANSWERS 2025
legal action against the insurer after written proof of loss is
provided? - correct answer- 3 years
During which period of a Disability Income Policy is coverage
effective but during which no benefits will be paid under the
policy? - correct answer- Probationary period
What is a MIB report? - correct answer- medical information on
an applicant for assessing life or health insurance risk
All of the following are common exclusions from loss found in
disability income policies EXCEPT for that incurred while -
correct answer- committing a misdemeanor All of the following are TRUE regarding incomplete applications
EXCEPT - correct answer- the incomplete application can be
accepted with the missing information added later.
What is the primary advantage for obtaining a reinstatement of
a policy rather than obtaining a new one? - correct answer-
insured original issue age is used Why are insurance policies considered conditional contracts? -
correct answer- Certain conditions need to be met to make the
contract legally enforceable.
How does a noncancelable policy differ from a guaranteed
renewable policy? - correct answer- With the noncancelable
policy the insurer may increase premiums only based on the When does insurable interest come into play in a life insurance
terms of the policy. policy? - correct answer- when the applicant for the policy is not
the insured
What does first dollar coverage mean? - correct answer- As
soon as covered medical expenses are incurred, the policy Which type of receipt makes the insurer liable for the risk from
begins to pay. the date of application, regardless of the applicant's
insurability? - correct answer- binding receipt
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Which of the following occurs immediately after the application
is submitted and the initial premium paid? - correct answer- the
underwriting process begins
What specific new procedures does the USA Patriot Act require
of insurance companies? - correct answer- Establish an anti-
money laundering program
A consumer report used to determine eligibility for insurance
may include all of the following EXCEPT - correct answer-
medical underwriting exam
What is the purpose of Stranger-originated life insurance
(STOLI)? - correct answer- he policy originated primarily or
solely for the purpose of resale.
For an individual long-term care policy there is an annual dollar
limit for tax deductions that is based on which of the following?
- correct answer- age
How do warranties differ from representations? - correct
answer- a warranty is guaranteed to be true, a representation is
believed to be true to the best of one's knowledge.
Under which situation must insurable interest exist between the
applicant and insured at the time of application? - correct
answer- When a third-party applicant names themselves
Obtaining consumer information reports under false pretenses beneficiary.
is prosecutable by which of the following? - correct answer- Fair
Credit Reporting Act
In noncontributory plans, which percentage of eligible members
must participate? - correct answer- 100%
Which of the following was specifically designed to address
STOLI and IOLI practices? - correct answer- NCOIL Act
When can the premiums of an individually owned health
insurance policy be deducted from the individual's income tax?
- correct answer- When the taxpayer's medical expenses
exceed 7.5% of adjusted gross income during a taxable year
PSI LIFE INSURANCE EXAM QUESTIONS
What is the maximum amount of time the insured has to file
AND ANSWERS 2025
legal action against the insurer after written proof of loss is
provided? - correct answer- 3 years
During which period of a Disability Income Policy is coverage
effective but during which no benefits will be paid under the
policy? - correct answer- Probationary period
What is a MIB report? - correct answer- medical information on
an applicant for assessing life or health insurance risk
All of the following are common exclusions from loss found in
disability income policies EXCEPT for that incurred while -
correct answer- committing a misdemeanor All of the following are TRUE regarding incomplete applications
EXCEPT - correct answer- the incomplete application can be
accepted with the missing information added later.
What is the primary advantage for obtaining a reinstatement of
a policy rather than obtaining a new one? - correct answer-
insured original issue age is used Why are insurance policies considered conditional contracts? -
correct answer- Certain conditions need to be met to make the
contract legally enforceable.
How does a noncancelable policy differ from a guaranteed
renewable policy? - correct answer- With the noncancelable
policy the insurer may increase premiums only based on the When does insurable interest come into play in a life insurance
terms of the policy. policy? - correct answer- when the applicant for the policy is not
the insured
What does first dollar coverage mean? - correct answer- As
soon as covered medical expenses are incurred, the policy Which type of receipt makes the insurer liable for the risk from
begins to pay. the date of application, regardless of the applicant's
insurability? - correct answer- binding receipt
, 3 | Page 4 | Page
Which of the following occurs immediately after the application
is submitted and the initial premium paid? - correct answer- the
underwriting process begins
What specific new procedures does the USA Patriot Act require
of insurance companies? - correct answer- Establish an anti-
money laundering program
A consumer report used to determine eligibility for insurance
may include all of the following EXCEPT - correct answer-
medical underwriting exam
What is the purpose of Stranger-originated life insurance
(STOLI)? - correct answer- he policy originated primarily or
solely for the purpose of resale.
For an individual long-term care policy there is an annual dollar
limit for tax deductions that is based on which of the following?
- correct answer- age
How do warranties differ from representations? - correct
answer- a warranty is guaranteed to be true, a representation is
believed to be true to the best of one's knowledge.
Under which situation must insurable interest exist between the
applicant and insured at the time of application? - correct
answer- When a third-party applicant names themselves
Obtaining consumer information reports under false pretenses beneficiary.
is prosecutable by which of the following? - correct answer- Fair
Credit Reporting Act
In noncontributory plans, which percentage of eligible members
must participate? - correct answer- 100%
Which of the following was specifically designed to address
STOLI and IOLI practices? - correct answer- NCOIL Act
When can the premiums of an individually owned health
insurance policy be deducted from the individual's income tax?
- correct answer- When the taxpayer's medical expenses
exceed 7.5% of adjusted gross income during a taxable year
