Latest 2025/2026 PSI Life, Accident, and
Health Insurance Test Bank | Complete
Practice Exam & Review Guide for a
First-Time Pass
1. What is the initial step of the total process of insuring a
health risk?
Answer: Field underwriting
Rationale: Field underwriting occurs when the agent meets
with the applicant, gathers information, and screens risks
before the application is submitted to the insurer’s home
office.
2. 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
Rationale: A binding receipt provides immediate coverage
from the application date, even if the applicant would later
be found uninsurable. This is different from a conditional
receipt, which only provides coverage if the applicant is
eventually found insurable.
3. Under the misstatement of age or gender provision, what
happens if an error is found at death?
, Answer: Benefits are adjusted to what the premium would
have purchased at the correct age/gender.
Rationale: The insurer does not void the policy but rather
adjusts the benefit to reflect the correct age or gender,
ensuring fairness to both parties.
4. What does "first dollar coverage" mean?
Answer: The policy begins to pay as soon as covered medical
expenses are incurred.
Rationale: There is no deductible requirement before
benefits start. The insurer pays from the first dollar of
covered expenses.
5. In a disability income policy, what is a "time deductible"
during which no benefits are payable?
Answer: Elimination period
Rationale: The elimination period is a waiting period (e.g.,
30, 60, 90 days) after disability begins before benefits start. It
functions like a time-based deductible.
6. What happens when the lifetime maximum benefit limit
has been reached?
Answer: The insured will pay all remaining medical costs for
as long as the policy is in force.
Rationale: Once the policy’s lifetime cap is exhausted, no
further benefits are payable, and the insured bears all
additional costs.
7. Whose responsibility is it to notify the company of a death
claim at the earliest opportunity?
, Answer: The producer (agent)
Rationale: The agent is typically responsible for assisting the
beneficiary and ensuring the insurer is notified promptly.
8. How are issues of ambiguity usually resolved in insurance
contracts?
Answer: In favor of the insured, because the insurer drafts
the contract.
Rationale: Insurance contracts are contracts of adhesion
(drafted by one party). Any ambiguity is interpreted in favor
of the insured.
9. What is a "return of premium" rider?
Answer: An increasing amount of term insurance that equals
the total of premiums paid to date.
Rationale: This rider returns the total premiums paid if the
insured dies during the term, adding to the death benefit.
10. What is the major reason regulators criticize dread disease
insurance policies?
Answer: Buyers often think they are getting broader
coverage than they actually have.
Rationale: Dread disease policies cover only specific illnesses
(e.g., cancer, heart disease), but consumers may mistakenly
believe they have comprehensive coverage.
11. What type of plan allows a patient to see any provider
without a referral and for the same cost?
Answer: Point of Service (POS) plan
Health Insurance Test Bank | Complete
Practice Exam & Review Guide for a
First-Time Pass
1. What is the initial step of the total process of insuring a
health risk?
Answer: Field underwriting
Rationale: Field underwriting occurs when the agent meets
with the applicant, gathers information, and screens risks
before the application is submitted to the insurer’s home
office.
2. 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
Rationale: A binding receipt provides immediate coverage
from the application date, even if the applicant would later
be found uninsurable. This is different from a conditional
receipt, which only provides coverage if the applicant is
eventually found insurable.
3. Under the misstatement of age or gender provision, what
happens if an error is found at death?
, Answer: Benefits are adjusted to what the premium would
have purchased at the correct age/gender.
Rationale: The insurer does not void the policy but rather
adjusts the benefit to reflect the correct age or gender,
ensuring fairness to both parties.
4. What does "first dollar coverage" mean?
Answer: The policy begins to pay as soon as covered medical
expenses are incurred.
Rationale: There is no deductible requirement before
benefits start. The insurer pays from the first dollar of
covered expenses.
5. In a disability income policy, what is a "time deductible"
during which no benefits are payable?
Answer: Elimination period
Rationale: The elimination period is a waiting period (e.g.,
30, 60, 90 days) after disability begins before benefits start. It
functions like a time-based deductible.
6. What happens when the lifetime maximum benefit limit
has been reached?
Answer: The insured will pay all remaining medical costs for
as long as the policy is in force.
Rationale: Once the policy’s lifetime cap is exhausted, no
further benefits are payable, and the insured bears all
additional costs.
7. Whose responsibility is it to notify the company of a death
claim at the earliest opportunity?
, Answer: The producer (agent)
Rationale: The agent is typically responsible for assisting the
beneficiary and ensuring the insurer is notified promptly.
8. How are issues of ambiguity usually resolved in insurance
contracts?
Answer: In favor of the insured, because the insurer drafts
the contract.
Rationale: Insurance contracts are contracts of adhesion
(drafted by one party). Any ambiguity is interpreted in favor
of the insured.
9. What is a "return of premium" rider?
Answer: An increasing amount of term insurance that equals
the total of premiums paid to date.
Rationale: This rider returns the total premiums paid if the
insured dies during the term, adding to the death benefit.
10. What is the major reason regulators criticize dread disease
insurance policies?
Answer: Buyers often think they are getting broader
coverage than they actually have.
Rationale: Dread disease policies cover only specific illnesses
(e.g., cancer, heart disease), but consumers may mistakenly
believe they have comprehensive coverage.
11. What type of plan allows a patient to see any provider
without a referral and for the same cost?
Answer: Point of Service (POS) plan
