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.
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.
