PSI Exam: Life, Accident, and Health Insurance
Basics Actual Exam Study Questions with
Verified Answers Already Graded A+
1. All of the following are TRUE regarding incomplete applications EXCEPT
A. the underwriting department will return the application to the
producer
B. the applicant will have to wait additional time before coverage begins
C. the incomplete application can be accepted with the missing
information added later
D. there will be a delay in the underwriting process - ANSWER the
incomplete application can be accepted with the missing information
added later
2. A health insurance policy that covers dependent children MUST provide
coverage for newborns beginning
A. 31 days after birth
B. on the date the insurance company is notified
C. at the moment of birth
D. 14 days after birth - ANSWER at the moment of birth
3. A company decides to purchase Key Employee Life Insurance for its vice
president of operations. All of the following statements are correct EXCEPT
the
A. employee names the beneficiary.
B. company is the applicant.
C. employee gives consent to be insured.
D. company is the policyowner. - ANSWER employee names the
beneficiary.
,4. Which type of receipt makes the insurer liable for the risk from the date of
application, regardless of the applicant's insurability?
A. binding receipt
B. inspection receipt
C. conditional receipt
D. temporary receipt - ANSWER binding receipt
5. Business partners wanting to purchase an insurance policy on the lives of
each of the other partners would choose
A. Key-Employee Life Insurance.
B. a Cross-Purchase Plan.
C. an Entity Plan.
D. Split-Dollar Insurance. - ANSWER a Cross-Purchase Plan.
6. What type of insurance should a company purchase if it wants to insure the
life of its CEO?
A. key person insurance
B. BOE insurance
C. group life policy
D. industrial life insurance - ANSWER key person insurance
7. All of the following are classifications of risk EXCEPT
A. preferred.
B. non-nicotine.
C. declined.
D. substandard. - ANSWER non-nicotine.
8. Which of the following policies provides a specified income benefit if an
insured person becomes incapable of working?
A. temporary Income
B. disability income
C. emergency income
D. supplemental income - ANSWER disability income
,9. Under which situation must insurable interest exist between the applicant
and insured at the time of application?
A. when the beneficiary is a member of the applicant's immediate family
B. when the applicant and the insured are the same person
C. when a third-party applicant names themselves beneficiary
D. when a third-party applicant names the insured's company as
beneficiary - ANSWER when a third-party applicant names
themselves beneficiary
10.The policy that is designed to provide nursing home benefits on an extended
basis for NOT less than 12 consecutive months is
A. Medicare Supplement.
B. Long-Term Care.
C. Nursing Home.
D. Basic Medical. - ANSWER Long-Term Care.
11.Which of the following occurs immediately after the application is submitted
and the initial premium paid?
A. The applicant's references are checked.
B. The beneficiaries are selected.
C. The underwriting process begins.
D. The insurance goes into effect. - ANSWER The underwriting process
begins.
12.An insurance policy's gross premium is calculated in which of the following
ways?
A. mortality - interest + expenses
B. risk - expenses + interest
C. mortality + expenses + interest
D. morbidity + expenses - interest - ANSWER mortality - interest +
expenses
, 13.Which is the major reason why long term care insurance is becoming
increasingly important?
A. It is easy to make a profit from investing in long term care.
B. As life expectancy increases, the chances of needing long term care
also increase.
C. Nursing homes only accept Medicare as a secondary insurance source.
D. Many younger people are developing life-threatening conditions and
require hospice care. - ANSWER As life expectancy increases, the
chances of needing long term care also increase.
14.How do warranties differ from representations?
A. A representation is guaranteed to be true, a warranty is believed to be
true to the best of one's knowledge.
B. A warranty is issued by the insurer, a representation is a statement
provided by the applicant.
C. An incorrect representation
automatically voids a contract, whereas an incorrect warranty must be proven.
D. A warranty is guaranteed to be true, a representation is believed to be true to
the best of one's knowledge. - ANSWER A warranty is guaranteed to be true, a
representation is believed to be true to the best of one's knowledge.
15.The life insurance policy will not be truly effective until all of the following
occur EXCEPT
A. the Statement of Good Health is obtained by the insurer.
B. the policy is delivered to the applicant.
C. the first premium is collected.
D. the producer has explained the policy to the client. - ANSWER the
producer has explained the policy to the client.
When does insurable interest come into play in a life insurance policy?
A. when the applicant for the policy is not the insured
B. when the free look period ends
Basics Actual Exam Study Questions with
Verified Answers Already Graded A+
1. All of the following are TRUE regarding incomplete applications EXCEPT
A. the underwriting department will return the application to the
producer
B. the applicant will have to wait additional time before coverage begins
C. the incomplete application can be accepted with the missing
information added later
D. there will be a delay in the underwriting process - ANSWER the
incomplete application can be accepted with the missing information
added later
2. A health insurance policy that covers dependent children MUST provide
coverage for newborns beginning
A. 31 days after birth
B. on the date the insurance company is notified
C. at the moment of birth
D. 14 days after birth - ANSWER at the moment of birth
3. A company decides to purchase Key Employee Life Insurance for its vice
president of operations. All of the following statements are correct EXCEPT
the
A. employee names the beneficiary.
B. company is the applicant.
C. employee gives consent to be insured.
D. company is the policyowner. - ANSWER employee names the
beneficiary.
,4. Which type of receipt makes the insurer liable for the risk from the date of
application, regardless of the applicant's insurability?
A. binding receipt
B. inspection receipt
C. conditional receipt
D. temporary receipt - ANSWER binding receipt
5. Business partners wanting to purchase an insurance policy on the lives of
each of the other partners would choose
A. Key-Employee Life Insurance.
B. a Cross-Purchase Plan.
C. an Entity Plan.
D. Split-Dollar Insurance. - ANSWER a Cross-Purchase Plan.
6. What type of insurance should a company purchase if it wants to insure the
life of its CEO?
A. key person insurance
B. BOE insurance
C. group life policy
D. industrial life insurance - ANSWER key person insurance
7. All of the following are classifications of risk EXCEPT
A. preferred.
B. non-nicotine.
C. declined.
D. substandard. - ANSWER non-nicotine.
8. Which of the following policies provides a specified income benefit if an
insured person becomes incapable of working?
A. temporary Income
B. disability income
C. emergency income
D. supplemental income - ANSWER disability income
,9. Under which situation must insurable interest exist between the applicant
and insured at the time of application?
A. when the beneficiary is a member of the applicant's immediate family
B. when the applicant and the insured are the same person
C. when a third-party applicant names themselves beneficiary
D. when a third-party applicant names the insured's company as
beneficiary - ANSWER when a third-party applicant names
themselves beneficiary
10.The policy that is designed to provide nursing home benefits on an extended
basis for NOT less than 12 consecutive months is
A. Medicare Supplement.
B. Long-Term Care.
C. Nursing Home.
D. Basic Medical. - ANSWER Long-Term Care.
11.Which of the following occurs immediately after the application is submitted
and the initial premium paid?
A. The applicant's references are checked.
B. The beneficiaries are selected.
C. The underwriting process begins.
D. The insurance goes into effect. - ANSWER The underwriting process
begins.
12.An insurance policy's gross premium is calculated in which of the following
ways?
A. mortality - interest + expenses
B. risk - expenses + interest
C. mortality + expenses + interest
D. morbidity + expenses - interest - ANSWER mortality - interest +
expenses
, 13.Which is the major reason why long term care insurance is becoming
increasingly important?
A. It is easy to make a profit from investing in long term care.
B. As life expectancy increases, the chances of needing long term care
also increase.
C. Nursing homes only accept Medicare as a secondary insurance source.
D. Many younger people are developing life-threatening conditions and
require hospice care. - ANSWER As life expectancy increases, the
chances of needing long term care also increase.
14.How do warranties differ from representations?
A. A representation is guaranteed to be true, a warranty is believed to be
true to the best of one's knowledge.
B. A warranty is issued by the insurer, a representation is a statement
provided by the applicant.
C. An incorrect representation
automatically voids a contract, whereas an incorrect warranty must be proven.
D. A warranty is guaranteed to be true, a representation is believed to be true to
the best of one's knowledge. - ANSWER A warranty is guaranteed to be true, a
representation is believed to be true to the best of one's knowledge.
15.The life insurance policy will not be truly effective until all of the following
occur EXCEPT
A. the Statement of Good Health is obtained by the insurer.
B. the policy is delivered to the applicant.
C. the first premium is collected.
D. the producer has explained the policy to the client. - ANSWER the
producer has explained the policy to the client.
When does insurable interest come into play in a life insurance policy?
A. when the applicant for the policy is not the insured
B. when the free look period ends
