PSI LIFE INSURANCE ACTUAL EXAM |COMPLETE QUESTIONS WITH EXPERT
SOLUTIONS| 2026 LATEST UPDATED| A+
1. What must the policy summary in a life insurance policy include?1. conditional receipt and the insurer?s home
office address2. reserve deposits.3. the
name and address of the insurance agent or broker4. definition of replacement.: the name and address of the insurance
agent or broker
2. Which of the following statements is CORRECT about Medicare Supplement Insurance?1. An agent must
provide an outline of coverage to an insured at the time of policy delivery.2. If an applicant has an existing Medicare
Supplement Policy, the information does not have to be mentioned on the new application.3. Replacement of a Medicare
Supplement Policy is prohibited unless approved by the Commissioner of Insurance.4. Duplication of Medicare
Supplement coverage is prohibited.: Duplication of Medicare Supplement coverage is prohibited. 3. Replacement refers
to which of the following?1. replacing an existing policy with a new one2. replacing a beneficiary3. replacing one insured
with another4. replacing the original policy with a copy: replacing an existing policy with a new one 4. An insured MUST
present evidence of insurability and pay all overdue premiums with interest after a policy has lapsed in order to exercise
which policy provision?1. Conversion.2. Reinstatement.3. Ownership.4. Guaranteed Renewability.: Reinstatement.
5. When replacing existing life insurance, what must an agent do?1. Collect the in-force policies and send them to
the replacing company.2. Specify what constitutes the replacement.3. Notify the producer whose policy is being
replaced.4. Inform the applicant that the new policy face amount must be
higher than the replaced policy.: Inform the applicant that the new policy face amount must be higher than the replaced
policy.
6. In order for an insurer to increase the premium on a noncancelable policy, which of the following MUST be
true?1. The premium increase must be in the contract at the time it is issued.2. The insured develops a medical condition
,that increases risk.3. The insured reaches the age of 65.4. The premium increase must be in line with current inflation
rates.: The premium increase must be in the contract at the time it is issued
7. An agent who offers to pay the first insurance premium as an inducement for an applicant to purchase a policy
may be found guilty of1. rebating.2. twisting.3. controlled business.4. unfair discrimination.: rebating
8. What is the purpose of Stranger-originated life insurance (STOLI)?1. the policy is originated primarily or solely
for the purpose of resale2. the policy is written so as to avoid proof of insurable interest3. it is a method of insuring a
person who has been previously declined.4. it is a fraudulent policy meant for financial gain of someone unknown to the
insured.: the policy is originated primarily or solely for the purpose of resale
9. What is the minimum grace period for monthly accident and health insurance policies?1. 7 days2. 10 days3. 31
days4. 90 days: 31 days
10. An insurance agent is defined as an individual who transacts business on behalf of1. a client.2. his/her agency.3.
an insured.4. an insurance company.-
: an insurance company
11. An employee is laid off and converts a group health plan to an individual policy. In this situation, the new policy1.
will include a probationary period.2. will exclude preexisting conditions for 6 months.3. premium rate will be higher
than the group rate.4. requires evidence of insurability.: premium rate will be higher than the group rate
12. Which of the following is defined as the dollar amount beyond which the insured no longer participates in the
payment of medical expenses?1. Deductible2. Stop Loss Limit3. Maximum Benefit4. Coinsurance: Stop Loss Limit 13.
All of the following are characteristics of variable whole life EXCEPT 1.
the premium is level2. there is no guaranteed cash value3. there is no guaranteed minimum death benefit.4. the agent
must be licensed in both insurance and securities.: there is no guaranteed minimum death benefit.
14. A group conversion option may be used in all the following instances EXCEPT1.
, the termination of the master policy.2. loss of coverage due to loss of employment.3. loss of eligibility on the part of a
class of insureds.4. a life-changing event, such as marriage, divorce, or childbirth.: a life-changing event, such as
marriage, divorce, or childbirth.
15 All of the following are characteristics of COBRA EXCEPT 1. qualifying events.2. notification statements.3.
continuation of coverage.4. change in medical privacy procedures.: change in medical privacy procedures.
16. Which of the following is TRUE of an equity-indexed annuity?1.
It is a variable annuity.2. It may decrease in value.3. It requires a securities license to sell.4. It has a guaranteed
minimum interest rate.: It has a guaranteed minimum interest rate.
17. Which of the following lists the three common types of permanent individual life insurance?1.
Variable Life, Whole Life, Universal Life2. Whole Life, Incidental Life, Term
Life3. Universal Life, AD&D,Term Life4. Group Life, Whole Life, Variable Life-
: Variable Life, Whole Life, Universal Life
18. Current assumption whole life policies are sensitive to which of the following? 1. interest rates2. age of the
insured3. health of the insured4. current cash value of the policy: interest rates
19. When should a buy-sell agreement include a provision for the buy-out of an owner's business interest in the event
of a disability?1.
When a company is newly purchased and it is likely the new owner will be disabled within a year.2. When a takeover of
a company with an owner who is in ill-health occurs.3. When there is a buy-sell agreement funded with disability
insurance to buyout the interest of a deceased owner or partner.4. When there is a buy-sell agreement funded with life
insurance to buyout the interest of a deceased owner or partner.: When there is a buy-sell agreement funded with life
insurance to buyout the interest of a deceased owner or partner.
20. A basic vision care package includes all of the following EXCEPT: safety glasses.
21. Which is the major reason why long term care insurance is becoming
increasingly important?: As life expectancy increases, the chances of needing long term care also increase
SOLUTIONS| 2026 LATEST UPDATED| A+
1. What must the policy summary in a life insurance policy include?1. conditional receipt and the insurer?s home
office address2. reserve deposits.3. the
name and address of the insurance agent or broker4. definition of replacement.: the name and address of the insurance
agent or broker
2. Which of the following statements is CORRECT about Medicare Supplement Insurance?1. An agent must
provide an outline of coverage to an insured at the time of policy delivery.2. If an applicant has an existing Medicare
Supplement Policy, the information does not have to be mentioned on the new application.3. Replacement of a Medicare
Supplement Policy is prohibited unless approved by the Commissioner of Insurance.4. Duplication of Medicare
Supplement coverage is prohibited.: Duplication of Medicare Supplement coverage is prohibited. 3. Replacement refers
to which of the following?1. replacing an existing policy with a new one2. replacing a beneficiary3. replacing one insured
with another4. replacing the original policy with a copy: replacing an existing policy with a new one 4. An insured MUST
present evidence of insurability and pay all overdue premiums with interest after a policy has lapsed in order to exercise
which policy provision?1. Conversion.2. Reinstatement.3. Ownership.4. Guaranteed Renewability.: Reinstatement.
5. When replacing existing life insurance, what must an agent do?1. Collect the in-force policies and send them to
the replacing company.2. Specify what constitutes the replacement.3. Notify the producer whose policy is being
replaced.4. Inform the applicant that the new policy face amount must be
higher than the replaced policy.: Inform the applicant that the new policy face amount must be higher than the replaced
policy.
6. In order for an insurer to increase the premium on a noncancelable policy, which of the following MUST be
true?1. The premium increase must be in the contract at the time it is issued.2. The insured develops a medical condition
,that increases risk.3. The insured reaches the age of 65.4. The premium increase must be in line with current inflation
rates.: The premium increase must be in the contract at the time it is issued
7. An agent who offers to pay the first insurance premium as an inducement for an applicant to purchase a policy
may be found guilty of1. rebating.2. twisting.3. controlled business.4. unfair discrimination.: rebating
8. What is the purpose of Stranger-originated life insurance (STOLI)?1. the policy is originated primarily or solely
for the purpose of resale2. the policy is written so as to avoid proof of insurable interest3. it is a method of insuring a
person who has been previously declined.4. it is a fraudulent policy meant for financial gain of someone unknown to the
insured.: the policy is originated primarily or solely for the purpose of resale
9. What is the minimum grace period for monthly accident and health insurance policies?1. 7 days2. 10 days3. 31
days4. 90 days: 31 days
10. An insurance agent is defined as an individual who transacts business on behalf of1. a client.2. his/her agency.3.
an insured.4. an insurance company.-
: an insurance company
11. An employee is laid off and converts a group health plan to an individual policy. In this situation, the new policy1.
will include a probationary period.2. will exclude preexisting conditions for 6 months.3. premium rate will be higher
than the group rate.4. requires evidence of insurability.: premium rate will be higher than the group rate
12. Which of the following is defined as the dollar amount beyond which the insured no longer participates in the
payment of medical expenses?1. Deductible2. Stop Loss Limit3. Maximum Benefit4. Coinsurance: Stop Loss Limit 13.
All of the following are characteristics of variable whole life EXCEPT 1.
the premium is level2. there is no guaranteed cash value3. there is no guaranteed minimum death benefit.4. the agent
must be licensed in both insurance and securities.: there is no guaranteed minimum death benefit.
14. A group conversion option may be used in all the following instances EXCEPT1.
, the termination of the master policy.2. loss of coverage due to loss of employment.3. loss of eligibility on the part of a
class of insureds.4. a life-changing event, such as marriage, divorce, or childbirth.: a life-changing event, such as
marriage, divorce, or childbirth.
15 All of the following are characteristics of COBRA EXCEPT 1. qualifying events.2. notification statements.3.
continuation of coverage.4. change in medical privacy procedures.: change in medical privacy procedures.
16. Which of the following is TRUE of an equity-indexed annuity?1.
It is a variable annuity.2. It may decrease in value.3. It requires a securities license to sell.4. It has a guaranteed
minimum interest rate.: It has a guaranteed minimum interest rate.
17. Which of the following lists the three common types of permanent individual life insurance?1.
Variable Life, Whole Life, Universal Life2. Whole Life, Incidental Life, Term
Life3. Universal Life, AD&D,Term Life4. Group Life, Whole Life, Variable Life-
: Variable Life, Whole Life, Universal Life
18. Current assumption whole life policies are sensitive to which of the following? 1. interest rates2. age of the
insured3. health of the insured4. current cash value of the policy: interest rates
19. When should a buy-sell agreement include a provision for the buy-out of an owner's business interest in the event
of a disability?1.
When a company is newly purchased and it is likely the new owner will be disabled within a year.2. When a takeover of
a company with an owner who is in ill-health occurs.3. When there is a buy-sell agreement funded with disability
insurance to buyout the interest of a deceased owner or partner.4. When there is a buy-sell agreement funded with life
insurance to buyout the interest of a deceased owner or partner.: When there is a buy-sell agreement funded with life
insurance to buyout the interest of a deceased owner or partner.
20. A basic vision care package includes all of the following EXCEPT: safety glasses.
21. Which is the major reason why long term care insurance is becoming
increasingly important?: As life expectancy increases, the chances of needing long term care also increase
