PSI: LIFE, ACCIDENT, AND HEALTH EXAM WITH VERIFIED
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DETAILED ANSWERS ||
Dividends that are received by a life insurance policy holder can be taxed in what
|| || || || || || || || || || || || || || ||
situation(s): ||
I - When the dividend amount received exceeds the amount that the policy holder paid in
|| || || || || || || || || || || || || || || ||
premiums - ✔✔The amount received that is over and above the amount paid into the policy
|| || || || || || || || || || || || || || ||
via premiums is considered to be gain and is therefore taxable. There are no dividends paid
|| || || || || || || || || || || || || || || || ||
on term life insurance policies.
|| || || ||
Under the misstatement of age or gender provision, what happens if it is determined at
|| || || || || || || || || || || || || || ||
death that the insured's age or gender was misstated on a life insurance policy application? -
|| || || || || || || || || || || || || || ||
✔✔Benefits are adjusted to an amount that the premium would have purchased at the
|| || || || || || || || || || || || || || ||
correct age or gender. || || ||
Which of the following must be given to the insurer within 20 days after occurrence or
|| || || || || || || || || || || || || || || ||
commencement of any loss covered by the policy, or as thereafter as is reasonably possible? - || || || || || || || || || || || || || || ||
✔✔Notice of claim.
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When will a policy pay on a UCR basis? - ✔✔When particular benefits are not listed on a
|| || || || || || || || || || || || || || || || || ||
payment schedule. ||
All of the following are non-forfeiture options EXCEPT - ✔✔Cash dividend option.
|| || || || || || || || || || ||
What happens when the lifetime maximum benefit limit has been reached? - ✔✔The
|| || || || || || || || || || || || ||
insured will pay all of the remaining medial costs for as long as the policy is in force.
|| || || || || || || || || || || || || || || || ||
Whose responsibility is it to make sure that the company is notified of a death claim at the
|| || || || || || || || || || || || || || || || || ||
earliest possible opportunity (in most cases)? - ✔✔The producer.
|| || || || || || || ||
,What is the waiver of premium provision? - ✔✔In a long term care contract, the premium is
|| || || || || || || || || || || || || || || ||
waived after the insured has been confined for a specific period of time.
|| || || || || || || || || || || || ||
All of the following are common exclusions from loss found in disability income policies
|| || || || || || || || || || || || || ||
EXCEPT for that incurred while? - ✔✔Committing a misdemeanor
|| || || || || || || ||
Which is a disadvantage to a flexible premium annuity? - ✔✔The actual amount of the
|| || || || || || || || || || || || || || ||
annuity benefit cannot be determined in advance.
|| || || || || ||
What does coninsurance mean? - ✔✔The insurer and the insured share expenses over the
|| || || || || || || || || || || || || ||
deductible.
Under normal conditions which of the following is TRUE for proof of loss when a single
|| || || || || || || || || || || || || || || ||
loss is claimed? - ✔✔The insured has 90 days from the date of loss to provide proof of loss.
|| || || || || || || || || || || || || || || || || ||
Which one of the following represents an advantage of obtaining a policy loan versus a
|| || || || || || || || || || || || || || ||
withdrawal? - ✔✔The loan is not taxed while a withdrawal is taxed for amounts above the
|| || || || || || || || || || || || || || || ||
contract cost basis. || ||
All of the following statements define preexisting conditions EXCEPT? - ✔✔Any chronic
|| || || || || || || || || || || ||
health condition that presents symptoms and which was unknown at the time of
|| || || || || || || || || || || || ||
application.
Which is the difference between participating and non-participating? - ✔✔Participating
|| || || || || || || || || ||
policies pay dividends while non-participating policies do not.
|| || || || || || ||
How does the per captia rule apply to proceeds from a life insurance policy? - ✔✔The
|| || || || || || || || || || || || || || || ||
proceeds are divided equally among living primary beneficiaries.
|| || || || || || ||
,How does a noncancelable policy differ from a guaranteed renewable policy? - ✔✔With the
|| || || || || || || || || || || || || ||
noncancelable policy the insurer may increase premiums only based on the terms of the
|| || || || || || || || || || || || || ||
policy.
Which of the following refers to how often a premium is paid? - ✔✔Mode
|| || || || || || || || || || || || ||
What is the return of premium rider? - ✔✔An increasing amount of term insurance that
|| || || || || || || || || || || || || || ||
always equals the total of premiums paid up to the current point.
|| || || || || || || || || || ||
What does first dollar coverage mean? - ✔✔As soon as covered medical expenses are
|| || || || || || || || || || || || || ||
incurred, the policy begins to pay.
|| || || || ||
When the suicide clause is inserted in a life insurance contract, death by suicide is not
|| || || || || || || || || || || || || || || ||
covered during the policy's initial: - ✔✔2 year period
|| || || || || || || ||
All of the following are required signatures on a life insurance application EXCEPT? -
|| || || || || || || || || || || || || ||
✔✔The minor in a juvenile policy.
|| || || || ||
What is the purpose of Stranger-originated life insurance (STOLI)? - ✔✔The policy is
|| || || || || || || || || || || || ||
originated primarily or solely for the purpose of resale.
|| || || || || || || ||
What procedure is used by an insurer to protect itself in the event a dispute arises and the
|| || || || || || || || || || || || || || || || || ||
applicant and the agent do not recall the changes that were made in a completed
|| || || || || || || || || || || || || || ||
application? - ✔✔The applicant and possibly the agent initial any changes made.
|| || || || || || || || || || ||
What specific new procedures does the USA Patriot Act require of insurance program? -
|| || || || || || || || || || || || || ||
✔✔Establish an anti-money laundering program. || || || ||
, Which of the following occurs immediately after the application is submitted and the initial
|| || || || || || || || || || || || || ||
premium paid? - ✔✔The underwriting process begins.|| || || || || ||
A consumer report used to determine eligibility for insurance may include all of the
|| || || || || || || || || || || || || ||
following EXCEPT? - ✔✔Medical Underwriting exam. || || || || ||
Why are insurance policies considered conditional contracts? - ✔✔Certain conditions need
|| || || || || || || || || || ||
to be met to make the contract legally enforceable.
|| || || || || || || ||
When does insurable interest come into play in a life insurance policy? - ✔✔When the
|| || || || || || || || || || || || || || ||
applicant for the policy is not the insured. || || || || || || ||
All of the following are TRUE regarding incomplete applications EXCEPT? - ✔✔The
|| || || || || || || || || || || ||
incomplete application can be accepted with the missing information added later.
|| || || || || || || || || ||
What is a MIB report? - ✔✔Medical information on an applicant for assessing life or health
|| || || || || || || || || || || || || || || ||
insurance risk. ||
Obtaining consumer information reports under false pretenses is prosecutable by which of
|| || || || || || || || || || || ||
the following? - ✔✔Fair Credit Reporting Act
|| || || || || ||
All of the following are classifications of risk EXCEPT? - ✔✔Non-nicotine
|| || || || || || || || || ||
Which type of receipt makes the insurer liable for the risk from the date of application,
|| || || || || || || || || || || || || || || ||
regardless of the applicant's insurability? - ✔✔Binding receipt
|| || || || || || ||
If the insurer wishes to share an applicant's HIV status, the applicant must be given full
|| || || || || || || || || || || || || || || ||
notice of all of the following EXCEPT? - ✔✔The treatment procedures that are covered by
|| || || || || || || || || || || || || || ||
the policy. ||
|| || || || || || || ||
DETAILED ANSWERS ||
Dividends that are received by a life insurance policy holder can be taxed in what
|| || || || || || || || || || || || || || ||
situation(s): ||
I - When the dividend amount received exceeds the amount that the policy holder paid in
|| || || || || || || || || || || || || || || ||
premiums - ✔✔The amount received that is over and above the amount paid into the policy
|| || || || || || || || || || || || || || ||
via premiums is considered to be gain and is therefore taxable. There are no dividends paid
|| || || || || || || || || || || || || || || || ||
on term life insurance policies.
|| || || ||
Under the misstatement of age or gender provision, what happens if it is determined at
|| || || || || || || || || || || || || || ||
death that the insured's age or gender was misstated on a life insurance policy application? -
|| || || || || || || || || || || || || || ||
✔✔Benefits are adjusted to an amount that the premium would have purchased at the
|| || || || || || || || || || || || || || ||
correct age or gender. || || ||
Which of the following must be given to the insurer within 20 days after occurrence or
|| || || || || || || || || || || || || || || ||
commencement of any loss covered by the policy, or as thereafter as is reasonably possible? - || || || || || || || || || || || || || || ||
✔✔Notice of claim.
|| || ||
When will a policy pay on a UCR basis? - ✔✔When particular benefits are not listed on a
|| || || || || || || || || || || || || || || || || ||
payment schedule. ||
All of the following are non-forfeiture options EXCEPT - ✔✔Cash dividend option.
|| || || || || || || || || || ||
What happens when the lifetime maximum benefit limit has been reached? - ✔✔The
|| || || || || || || || || || || || ||
insured will pay all of the remaining medial costs for as long as the policy is in force.
|| || || || || || || || || || || || || || || || ||
Whose responsibility is it to make sure that the company is notified of a death claim at the
|| || || || || || || || || || || || || || || || || ||
earliest possible opportunity (in most cases)? - ✔✔The producer.
|| || || || || || || ||
,What is the waiver of premium provision? - ✔✔In a long term care contract, the premium is
|| || || || || || || || || || || || || || || ||
waived after the insured has been confined for a specific period of time.
|| || || || || || || || || || || || ||
All of the following are common exclusions from loss found in disability income policies
|| || || || || || || || || || || || || ||
EXCEPT for that incurred while? - ✔✔Committing a misdemeanor
|| || || || || || || ||
Which is a disadvantage to a flexible premium annuity? - ✔✔The actual amount of the
|| || || || || || || || || || || || || || ||
annuity benefit cannot be determined in advance.
|| || || || || ||
What does coninsurance mean? - ✔✔The insurer and the insured share expenses over the
|| || || || || || || || || || || || || ||
deductible.
Under normal conditions which of the following is TRUE for proof of loss when a single
|| || || || || || || || || || || || || || || ||
loss is claimed? - ✔✔The insured has 90 days from the date of loss to provide proof of loss.
|| || || || || || || || || || || || || || || || || ||
Which one of the following represents an advantage of obtaining a policy loan versus a
|| || || || || || || || || || || || || || ||
withdrawal? - ✔✔The loan is not taxed while a withdrawal is taxed for amounts above the
|| || || || || || || || || || || || || || || ||
contract cost basis. || ||
All of the following statements define preexisting conditions EXCEPT? - ✔✔Any chronic
|| || || || || || || || || || || ||
health condition that presents symptoms and which was unknown at the time of
|| || || || || || || || || || || || ||
application.
Which is the difference between participating and non-participating? - ✔✔Participating
|| || || || || || || || || ||
policies pay dividends while non-participating policies do not.
|| || || || || || ||
How does the per captia rule apply to proceeds from a life insurance policy? - ✔✔The
|| || || || || || || || || || || || || || || ||
proceeds are divided equally among living primary beneficiaries.
|| || || || || || ||
,How does a noncancelable policy differ from a guaranteed renewable policy? - ✔✔With the
|| || || || || || || || || || || || || ||
noncancelable policy the insurer may increase premiums only based on the terms of the
|| || || || || || || || || || || || || ||
policy.
Which of the following refers to how often a premium is paid? - ✔✔Mode
|| || || || || || || || || || || || ||
What is the return of premium rider? - ✔✔An increasing amount of term insurance that
|| || || || || || || || || || || || || || ||
always equals the total of premiums paid up to the current point.
|| || || || || || || || || || ||
What does first dollar coverage mean? - ✔✔As soon as covered medical expenses are
|| || || || || || || || || || || || || ||
incurred, the policy begins to pay.
|| || || || ||
When the suicide clause is inserted in a life insurance contract, death by suicide is not
|| || || || || || || || || || || || || || || ||
covered during the policy's initial: - ✔✔2 year period
|| || || || || || || ||
All of the following are required signatures on a life insurance application EXCEPT? -
|| || || || || || || || || || || || || ||
✔✔The minor in a juvenile policy.
|| || || || ||
What is the purpose of Stranger-originated life insurance (STOLI)? - ✔✔The policy is
|| || || || || || || || || || || || ||
originated primarily or solely for the purpose of resale.
|| || || || || || || ||
What procedure is used by an insurer to protect itself in the event a dispute arises and the
|| || || || || || || || || || || || || || || || || ||
applicant and the agent do not recall the changes that were made in a completed
|| || || || || || || || || || || || || || ||
application? - ✔✔The applicant and possibly the agent initial any changes made.
|| || || || || || || || || || ||
What specific new procedures does the USA Patriot Act require of insurance program? -
|| || || || || || || || || || || || || ||
✔✔Establish an anti-money laundering program. || || || ||
, Which of the following occurs immediately after the application is submitted and the initial
|| || || || || || || || || || || || || ||
premium paid? - ✔✔The underwriting process begins.|| || || || || ||
A consumer report used to determine eligibility for insurance may include all of the
|| || || || || || || || || || || || || ||
following EXCEPT? - ✔✔Medical Underwriting exam. || || || || ||
Why are insurance policies considered conditional contracts? - ✔✔Certain conditions need
|| || || || || || || || || || ||
to be met to make the contract legally enforceable.
|| || || || || || || ||
When does insurable interest come into play in a life insurance policy? - ✔✔When the
|| || || || || || || || || || || || || || ||
applicant for the policy is not the insured. || || || || || || ||
All of the following are TRUE regarding incomplete applications EXCEPT? - ✔✔The
|| || || || || || || || || || || ||
incomplete application can be accepted with the missing information added later.
|| || || || || || || || || ||
What is a MIB report? - ✔✔Medical information on an applicant for assessing life or health
|| || || || || || || || || || || || || || || ||
insurance risk. ||
Obtaining consumer information reports under false pretenses is prosecutable by which of
|| || || || || || || || || || || ||
the following? - ✔✔Fair Credit Reporting Act
|| || || || || ||
All of the following are classifications of risk EXCEPT? - ✔✔Non-nicotine
|| || || || || || || || || ||
Which type of receipt makes the insurer liable for the risk from the date of application,
|| || || || || || || || || || || || || || || ||
regardless of the applicant's insurability? - ✔✔Binding receipt
|| || || || || || ||
If the insurer wishes to share an applicant's HIV status, the applicant must be given full
|| || || || || || || || || || || || || || || ||
notice of all of the following EXCEPT? - ✔✔The treatment procedures that are covered by
|| || || || || || || || || || || || || || ||
the policy. ||
